California state and local tuberculosis (TB) programs used a systematic process to develop a set of indicators to measure and improve program performance in controlling TB. These indicators were the basis for a quality improvement process known as the TB Indicators Project. Indicators were derived from guidelines and legal mandates for clinical, case management, and surveillance standards and were assessed using established criteria. The indicators were calculated using existing surveillance data. The indicator set was field tested by local programs with high TB morbidity and subsequently revised. Collaboration with key stakeholders at all stages was crucial to developing useful and accepted indicators. Data accessibility was a critical requirement for indicator implementation. Indicators most frequently targeted for performance improvement were those perceived to be amenable to intervention. Indicators based on surveillance data can complement other public health program improvement efforts by identifying program gaps and successes and monitoring performance trends.