An approach to essay grading based on signal detection theory (SDT) is presented. SDT offers a basis for understanding rater behavior with respect to the scoring of construct responses, in that it provides a theory of psychological processes underlying the raters' behavior. The approach also provides measures of the precision of the raters and the accuracy of classifications. An application of latent class SDT to essay grading is detailed, and similarities to and differences from item response theory (IRT) are noted. The validity and utility of classifications obtained from the SDT model and scores obtained from IRT models are compared. Validity coefficients were found to be about equal in magnitude across SDT and IRT models. Results from a simulation study of a 5-class SDT model with eight raters are also presented.