Best practices for assessing developmental skills in young children focus on naturalistic observation in everyday settings, but the effects of environment on test scores, eligibility status and administration time have not been explored. The Peabody Developmental Motor Scales-Second Edition (PDMS-2) was administered to 34 children aged 18 to 59 months in natural and pull-out settings. PDMS-2 total, gross, and fine motor quotient (TMQ, GMQ, and FMQ) scores were significantly lower in the natural environment (p's≤.014). Based on our results, more children would qualify for services when tested in natural environments using TMQ and GMQ scores. It also took significantly longer to test children in the natural environment (p=.044). Pediatric service providers should consider the impact environment may have on children's scores and resource utilization when planning assessment. Further, use of standardized tests of discrete motor skills, such as the PDMS-2, may be more appropriate in pull-out settings.