BACKGROUND: Recommendations for optimizing continuing medical education (CME) effectiveness in improving physician application of knowledge and psychomotor skills are needed to guide the development of processes that effect physician change and improve patient care. METHODS: The guideline panel reviewed evidence tables and a comprehensive review of the effectiveness of CME developed by The Johns Hopkins Evidence-based Practice Center for the Agency for Healthcare Research and Quality (AHRQ Evidence Report). The panel considered studies relevant to the effect of CME on physician knowledge application and psychomotor skill development. From the 136 studies identified in the systematic review, 15 articles, 12 addressing physician application of knowledge and 3 addressing psychomotor skills, were identified and reviewed. Recommendations for optimizing CME were developed using the American College of Chest Physicians guideline grading system. RESULTS: The preponderance of evidence demonstrated improvement in physician application of knowledge with CME. The quality of evidence did not allow specific recommendations regarding optimal media or educational techniques or the effectiveness of CME in improving psychomotor skills. CONCLUSIONS: CME is effective in improving physician application of knowledge. Multiple exposures and longer durations of CME are recommended to optimize educational outcomes.