Clinical indicators give an indication of the quality of the patient care delivered. They must comply with highquality standards and should be constructed in a careful and transparent manner. Indicators must be relevant to the important aspects of quality of care. There should be adequate research evidence that the recommendations from which they are derived are related to clinical effectiveness, safety and efficiency. They should measure the quality in a valid and reliable manner with little inter- and intra-observer variability so that they are suitable for comparisons between professionals, practices, and institutions. Indicators are selected from research data with consideration for optimal patient care (preferably an evidence-based guideline), supplemented by expert opinion. In the selection procedure, the feasibility, such as their measurability and improvability, is important beside validity and reliability. A clinical indicator should be defined exactly and expressed as a quotient. After a try-out, the measurements and reporting should follow. The report contains an in-depth analysis of causal and contributing factors associated with the measured results. A description of the clinical circumstances and a correction for case mix should be included to allow for a justified interpretation. The indicators must be part of an improvement strategy, for which comparison feedback is often used. We give examples of indicator development and applications in oncology, diabetes care, and the use of antibiotics for treating pneumonia. We explain how comparison with reference data can be used to construct improvement programmes.