Measuring healthcare quality has become an increasingly important task for regulating bodies and healthcare institutions. Strategically chosen quality indicators provide a means of understanding the quality and safety of the healthcare system. Current frameworks developed to determine aspects of care to be measured do not provide the level of precision required to ensure that indicators are best selected to enable focused action to improve health. We propose a clearly structured process for selecting indicators at a national and local level based on six steps: (i) identify the problem for which measurement is needed, (ii) identify the perspective from which to measure, (iii) focus measurement on transition points through the health system, (iv) identify the type of probe required, (v) apply evaluation criteria to prioritize indicator selection and action and (vi) test the indicator in the clinical setting to which it will be applied. These steps should form the basis of a framework to drive quality indicator development.