Cognitive reserve, broadly conceived, encompasses aspects of brain structure and function that optimize individual performance in the presence of injury or pathology. Reserve is defined as a feature of brain structure and/or function that modifies the relationship between injury or pathology and performance on neuropsychological tasks or clinical outcomes. Reserve is challenging to study for two reasons. The first is: reserve is a hypothetical construct, and direct measures of reserve are not available. Proxy variables and latent variable models are used to attempt to operationalize reserve. The second is: in vivo measures of neuronal pathology are not widely available. It is challenging to develop and test models involving a risk factor (injury or pathology), a moderator (reserve) and an outcome (performance or clinical status) when neither the risk factor nor the moderator are measured directly. We discuss approaches for quantifying reserve with latent variable models, with emphasis on their application in the analysis of data from observational studies. Increasingly latent variable models are used to generate composites of cognitive reserve based on multiple proxies. We review the theoretical and ontological status of latent variable modeling approaches to cognitive reserve, and suggest research strategies for advancing the field.