This paper describes an approach to application software development (the Application Software Factory) that enables over 90 percent reuse of code, produces application code where quality is measured in defects per million lines of code, and generates productivity exceeding that of interpretative 4GL environments. The environment is built on top of a commercial CASE tool and does not rely on exotic technology. The delivered systems are COBOL transaction processing systems using relational database technology and are predominantly online. Two applications of approximately 200,000 lines of code have each been developed by teams at two different sites. A third application of over 2 million lines of code is nearing completion. The paper depicts the important relationships between technology, management, methods, and design approaches that comprise the Application Software Factory.