This article reports on the development of the Facial Emotion Recognition and Empathy Test (FERET) as a reliable and valid tool for assessing facial emotion recognition and empathy skills in primary school-aged children. Pictures of human faces developed by the researcher were used as response options for the children. The range of response options and their associated scores were constructed based on the Two Factorial Consensual Mood Structure, which indicates dimensions of emotions. Four hundred and twenty-two primary school children participated in the research. The children were asked to recognise emotions and display the appropriate empathetic response. Data were analysed through item analysis, exploratory factor analysis (EFA) and Item Response Theory (IRT). As a result of item analysis, FERET has been designed to include 6 items related to facial expressions of key emotions and has been found to have an internal consistency coefficient of .82 and be unidimensional. Results from the IRT indicated that all the items in FERET discriminate better responders from poor responders. It was concluded that FERET can produce reliable and valid results in measuring facial emotion recognition and empathy skills among primary school children.