Even though CAI(Computer Assisted Instruction) is gaining recognition for its capabilities and its potential for facilitating individualized instruction, research on designing ICAI (Individualized Computer Assisted Instruction) systems is still primarily in the prototype stage. Consequently, the purpose of this study is to provide fundamental principles and guidelines for the efficient and effective design of ICAI systems. In order to establish these principles and guidelines, the researchers review a lot of research and synthesized the results under the following subcategories: 1) definitions of ICAI systems, 2) important components of ICAI systems, and 3) a summary of previous ICAI systems. Based on the results of the review, the researchers set up four fundamental criteria for designing an ICAI system: 1) need to reflect as much knowledge as possible from previous research on ICAI and CAI, 2) need to allow for the usage of such new technologies as ISDN, CD-I, and multimedia, 3) need for an approach based more on instructional systems design (ISD) than on a piecemeal theory or model such as one based on computer science and/or cognitive science, and 4) need to strive for a more systemic and holistic approach, one which includes programs, learners, instructors, and the whole system. As a result of synthesizing the knowledge gained from the literature review and the four criteria, the researchers developed more detailed principles for designing ICAI systems, which can be summarized under three subcategories: 1) principles for micro level ICAI design, 2) principles for macro level ICAI design, and 3) principles for the design of the whole ICAI system.