Abstarct: Despite the inherent drawbacks of one-shot final exams, this mode of assessment still prevails in both public schools and private language schools of Iran. Scholars believe that continuous assessment can be a valuable aid to improve this situation. Hence, this study aims to explore Iranian EFL teachers’ perceptions of continuous assessment. To this end, seventeen EFL teachers selected through theoretical sampling were interviewed through unstructured open-ended interview to share their opinion on the topic. The data were then deeply analyzed in line with the grounded theory. The rigorous coding procedure of the grounded theory method differentiated the merits of and demerits of continuous assessment. Concerning the merits, the participants believed that continuous assessment has a profound positive effect on transferring information into students’ long term memory, reducing learners’ test anxiety, increasing their motivation, encouraging their regular class attendance, suggesting them appropriate supplementary materials, lowering discrimination in classes, and providing accurate and continuous report of students’ academic achievement. With regard to its demerits, participants believed that continuous assessment would increase unpaid workload on teacher, increase learners’ workload, and be inapplicable in advanced levels. They also believed that putting great attention on summative nature of continuous assessment would encourage rote memorization, increase test anxiety, penalize introverted learners, and lower learners’ self-confidence. The study would be fruitful for instructional curriculum to help teachers to evaluate students’ progress and achievement accurately and help students to improve their learning and overcome their problems with final examination.