Although a number of instruments have been used to measure health literacy, a key limitation of the leading instruments is that they only measure reading ability or print literacy and, to a limited extent, numeracy. Consequently, the present study aimed to develop a new instrument to measure an individual's health literacy using a more comprehensive and skills-based approach. First, we identified a set of skills to demonstrate and tasks to perform. Next, we selected real-world health-related stimuli to enable measurement of these skills, and then we developed survey items. After a series of cognitive interviews, the survey items were revised, developed into a 38-item instrument, and pilot tested using a Web-based panel. Based on the psychometric properties, we removed items that did not perform as well, resulting in a 25-item instrument named the Health Literacy Skills Instrument. Based on confirmatory factor analysis, the items were grouped into five subscales representing prose, document, quantitative, oral, and Internet-based information seeking skills. Construct validity was supported by correlations with the short form of the Test of Functional Health Literacy in Adults and self-reported skills. The overall instrument demonstrated good internal consistency, with a Cronbach's alpha of 0.86. Additional analyses are planned, with the goal of creating a short form of the instrument.