The present paper examines test anxiety from a cross-cultural perspective with specific reference to the Indian and American cultures. The construct of test anxiety has been examined in many cultures all over the world. In this review, the importance of understanding and incorporating contextual factors in cross-cultural research is emphasized. Moreover, some of the methodological issues related to investigating culture-behavior relationship are discussed. Specifically, the derived-etic approach for conducting cross-cultural research is espoused. Then, research findings from western, cross-cultural, and Indian studies on test anxiety are reviewed. Consistent with the individualistic orientation of the western society, much of the research in the western world has adopted a de-contextualized approach. Inasmuch as many of the cross-cultural and Indian studies on test anxiety have their roots in western research, they have ignored the cultural context as well. To address this void, contextual variables relevant to test anxiety in the Indian setting are examined and hypotheses regarding the nature of test anxiety in Indian children are proposed. Finally, a research agenda is presented to examine these hypotheses using a derived-etic approach.