BACKGROUND The ability of an assessment to predict performance would be of major benefit to residency programs, allowing for early identification of residents at risk. OBJECTIVE We sought to establish whether passing the Objective Structured Assessment of Technical Skills (OSATS) examination in postgraduate year 1 (PGY-1) predicts future performance. METHODS Between 2002 and 2012, 133 PGY-1 surgery residents at the University of Toronto (Toronto, Ontario, Canada) completed an 8-station, simulated OSATS examination as a component of training. With recently set passing scores, residents were assigned a pass/fail status using 3 standards setting methods (contrasting groups, borderline group, and borderline regression). Future in-training performance was compared between residents who had passed and those who failed the OSATS, using in-training evaluation reports from resident files. A Mann-Whitney U test compared performance among groups at PGY-2 and PGY-4 levels. RESULTS Residents who passed the OSATS examination outperformed those who failed, when compared during PGY-2 across all 3 standard setting methodologies (P < .05). During PGY-4, only the contrasting groups method showed a significant difference (P < .05). CONCLUSIONS We found that PGY-1 surgical resident pass/fail status on a technical skills examination was associated with future performance on in-training evaluation reports in later years. This provides validity evidence for the current PGY-1 pass/fail score, and suggests that this technical skills examination may be used to predict performance and to identify residents who require remediation.