The goals of education and qualification in modern industrial societies can no longer be described by a fixed set of specialized skills that are transferable from one generation to the next. Nowadays, knowledge must be applicable to different, new, and complex situations and contexts. It is against this background that the concept of competence has attracted increased research attention. Competencies are conceptualized as complex ability constructs that are context-specific, trainable, and closely related to real life. The theoretical modeling of competencies, their assessment, and the usage of assessment results in practice present new challenges for psychological and educational research. The present article reviews current issues in competence modeling, outlining research questions and the current state of research, and identifying the need for more interdisciplinary research. Finally, a research program recently initiated by the German Research Foundation (DFG) to address these questions and demands is presented.