Virus neutralization assays provide a means to quantitate functional antibody responses that block virus infection. These assays are instrumental in defining vaccine and therapeutic antibody potency, immune evasion by viral variants, and post-infection immunity. Here we describe the development, optimization and evaluation of a live virus microneutralization assay specific for severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). In this assay, SARS-CoV-2 clinical isolates are pre-incubated with serial diluted antibody and added to Vero E6 cells. Replicating virus is quantitated by enzyme-linked immunosorbent assay (ELISA) targeting the SARS-CoV-2 nucleocapsid protein and the standardized 50% virus inhibition titer calculated. We evaluated critical test parameters that include virus titration, assay linearity, number of cells, viral dose, incubation period post-inoculation, and normalization methods. Virus titration at 96 hours was determined optimal to account for different growth kinetics of clinical isolates. Nucleocapsid protein levels directly correlated with virus inoculum, with the strongest correlation at 24 hours post-inoculation. Variance was minimized by infecting a cell monolayer, rather than a cell suspension. Neutralization titers modestly decreased with increasing numbers of Vero E6 cells and virus amount. Application of two different normalization models effectively reduced the intermediate precision coefficient of variance to <16.5%. The SARS-CoV-2 microneutralization assay described and evaluated here is based on the influenza virus microneutralization assay described by WHO, and are proposed as a standard assay for comparing neutralization investigations.