Abstract: Starting with the view of institution change, the cause, connotation and significance of assessment system for physical literacy was explored from the perspectives of its origin, construction and system practice, taking the reform of school physical education practice in Shanghai as the case study. It reveals that it is the development strategy of the Party and government, as well as the practice of the reform in Shanghai, that renews the connotation and cognition value of school physical education, which forms the basic root for the institution change of assessment system. The assessment system, including theory model and detailed management system, bases its change on the principles of science, reason and effectiveness. Its practical application is the institution practice, whose value lies in its dispersible, balanced and demonstrative effect brought about by the institution change in core areas.