The physics basis of ITER has been developed from an assessment of the present knowledge of tokamak physics with allowance for improvements in that knowledge during the design and construction phases of ITER. The assessment has been carried out by the ITER design team in collaboration with the international fusion program, including participation by the experimental teams of all of the major toroidal experiments. The physics basis consists of guidelines for energy confinement, operational limits, power and particle control, disruptions, current drive and heating, alpha particle physics, and plasma control. The ITER physics group has worked with the engineering design groups to implement these guidelines. In addition, a preliminary design for the plasma diagnostics for ITER has been developed, and an operational program has been planned. In many cases, the physics issues have not been fully resolved, and a physics R&D program has been developed to complete the physics basis for ITER.