This qualitative study explored the implementation of Differentiated Instruction (DI) in Philippine multigrade classrooms with the aim of understanding teachers’ experiences, strategies, and challenges, as well as developing a performance appraisal tool. Guided by its specific objectives, the research examined how teachers plan, deliver, and manage differentiated lessons while addressing the diverse learning needs of students across multiple grade levels. Findings revealed that effective DI is rooted in intentional instructional planning, including learner profiling, curriculum mapping, and flexible pacing. Instructional delivery was enriched through the use of thematic and multimodal strategies, ability-based groupings, and contextually relevant teaching aids, although technological access and training remained persistent barriers. Classroom management practices emphasized inclusive routines, peer collaboration, and adaptive learning spaces. Teachers also highlighted the importance of assessment tools and reflective teaching practices in continuously improving instruction. In response to these findings, the study developed the Multigrade Differentiated Instruction Performance Appraisal Tool (MDI-PAT), which synthesizes theoretical frameworks with authentic classroom practices. The MDI-PAT serves as both a self-assessment and professional development guide for multigrade educators, promoting ongoing improvement in DI competencies. The study concludes that enhancing teacher capacities in planning, delivery, assessment, classroom management, and reflective practice is essential for fostering inclusive and effective learning environments in multigrade contexts. The insights and tools presented provide a practical framework for educational stakeholders seeking to enhance multigrade instruction in resource-constrained settings.