This research describes the development process, psychometric analyses and part validation study of a theoretically-grounded Rasch-based instrument, the Nature of Science Instrument-Elementary (NOSI-E). The NOSI-E was designed to measure elementary students' understanding of the Nature of Science (NOS). Evidence is provided for three of the six validity aspects (content, substantive and generalizability) needed to support the construct validity of the NOSI-E. A future article will examine the structural and external validity aspects. Rasch modeling proved especially productive in scale improvement efforts. The instrument, designed for large-scale assessment use, is conceptualized using five construct domains. Data from 741 elementary students were used to pilot the Rasch scale, with continuous improvements made over three successive administrations. The psychometric properties of the NOSI-E instrument are consistent with the basic assumptions of Rasch measurement, namely that the items are well-fitting and invariant. Items from each of the five domains (Empirical, Theory-Laden, Certainty, Inventive, and Socially and Culturally Embedded) are spread along the scale's continuum and appear to overlap well. Most importantly, the scale seems appropriately calibrated and responsive for elementary school-aged children, the target age group. As a result, the NOSI-E should prove beneficial for science education research. As the United States' science education reform efforts move toward students' learning science through engaging in authentic scientific practices (NRC, 2011), it will be important to assess whether this new approach to teaching science is effective. The NOSI-E can be used as one measure of whether this reform effort has an impact.