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The Highway Capacity Manual provides a method for determining the level of service (LOS) on freeways to evaluate freeway performance. Apart from being essentially an off-line decision support tool for planning and design, it is also based on point measurements from loop detectors, which may not provide an accurate assessment of freeway section performance. In order to meet user requirements of advanced traffic management and information systems, new LOS criteria based on section measures are required for real-time freeway analysis. The main aim of this research was to demonstrate a technique for development of such LOS criteria. The study uses a new measure of effectiveness, called reidentified median section speed (RMSS), derived from analysis of inductive vehicle signatures and reidentification of vehicles traveling through a major section of freeway in the City of Irvine, CA. Two main issues regarding real-time LOS criteria were addressed. The first was how to determine the threshold values partitioning the LOS categories. To provide reliable real-time traffic information, the threshold values should be decided such that RMSSs within the same LOS category represent similar traffic conditions as much as possible. In addition, RMSSs in different LOS categories should represent dissimilar traffic conditions. The second issue concerned the aggregation interval to use for deriving LOS categories. Two clustering techniques were then employed to derive LOS categories, namely, k-means and fuzzy approaches. Wilk's Lambda analysis and LOS stability analysis were performed to design new LOS criteria. Six LOS categories defined in terms of RMSS over a fixed 240-s interval were identified as the best solution to meet two major considerations described above. The procedures used in this study are readily transferable to other similarly equipped freeway sections for the derivation of real-time LOS.