There is a lack of standardized tests that assess functional performance for sustained upper extremity activity. This study describes development of a new test for measuring functional performance of the upper extremity and neck and assesses reliability and concurrent validity in patients with shoulder pathology. A series of developmental tests were conducted to develop a protocol for assessing upper extremity tasks that required multi-level movement and sustained elevation. Kinematics of movement were investigated to inform subtask structure. Tasks and test composition were refined to fit clinical applicability criteria and pilot tested on 5 patients awaiting surgery for shoulder impingement and age-sex matched controls. Test-retest reliability was assessed on 10 subjects. Then a cohort of patients with mild to moderate (n = 17) shoulder pathology and 19 controls (17 were age-sex matched to patients) were tested to further validate the Functional Impairment Test-Hand, and Neck/Shoulder/Arm (FIT-HaNSA) by comparing it to self-reported function and measured strength. The FIT-HaNSA, DASH and SPADI were tested on a single occasion. Impairments in isometric strength were measured using hand-held dynamometry. Discriminative validity was determined by comparing scores to those of age-sex matched controls (n = 34), using ANOVA. Pearson correlations between outcome measures (n = 41) were examined to establish criterion and convergent validity. A test protocol based on three five-minute subtasks, each either comprised of moving objects to waist-height shelves, eye-level shelves, or sustained manipulation of overhead nuts/bolts, was developed. Test scores for the latter 2 subtasks (or total scores) were different between controls as compared to either surgical-list patients with shoulder impingement or a variety of milder shoulder pathologies (p < 0.01). Test 1 correlated the highest with the DASH (r = -0.83), whereas Test 2 correlated highest with the SPADI (r = -0.76). Initial data suggest the FIT-HaNSA provides valid assessment of impaired functional performance in patients with shoulder pathology. It discriminates between patients and controls, is related to self-reported function, and yet provides distinct information. Longitudinal testing is warranted.