Clinical reasoning is one of the central components of psychological assessment. The identification of a client's psychological difficulties and the subsequent depiction of their onset, development, and interrelationships enables clinicians to plan treatment in a systematic and effective manner. Traditionally, the hypothetico-deductive conception of scientific method, with its restricted focus on the testing of hypotheses, has provided the framework for assessment and the development of case conceptualisations. The framework has major limitations, and in this paper we present an alternative abductive theory of scientific method which we believe provides more appropriate guidance for clinicians' reasoning at the various stages of the assessment process. The guidance covers identification of a client's difficulties, the generation of a case formulation or embryonic clinical theory through abductive reasoning, and its subsequent development and evaluation in terms of multiple criteria.