The purpose of this paper is to review major statistical and psychometric issues impacting the study of psychophysiological reactivity and discuss their implications for applied developmental researchers. We first cover traditional approaches such as the observed difference score (DS) and the observed residual score (RS), including a review of classic and recent research on their reliability and validity from two related bodies of work: the measurement of change and the Law of Initial Values. Second, we review several types of latent variable modeling in this context: latent difference score (LDS) models, latent residual score (LRS) models, latent state-trait (LST) models, and latent growth curve (LGC) models. Finally, we provide broad guidelines for applied researchers broken down by key stages of a psychophysiological project: study planning, data analysis, and reporting of results. Our recommendations highlight the need for (1) increased attention to the ubiquitous nature of measurement error in observed variables and the importance of employing latent variable models when possible, and (2) increased specification of theories relating to the construct of reactivity, especially in regards to the distinction between baseline arousal and change over time in broader systems of variables.