The research presented in this report was conducted to identify the important factors influencing the water sensitivity of asphalt paving mixtures, and to develop a test method to evaluate water sensitivity of asphalt concrete mixtures for mix design. The test method was to be performance related. A review of current procedures revealed that no single method was suitable for evaluation and related to field performance. Based on a hypothesis that air voids in the mixture may be the major source and cause of water damage, a test system was developed to evaluate the major factors that influence water sensitivity. The Environmental Conditioning System (ECS) was used to develop a test procedure that includes specimen preparation; measurement of permeability using air, water, or both; vacuum wetting; cycling at various temperatures; and continuous repeated loading while monitoring resilient modulus after each conditioning cycle.