Surface brightness fluctuations (SBFs) are much brighter in the IR than they are at optical wavelengths, making it possible to measure greater distances using IR SBFs. We report new K' (2.1 micron) SBF measurements of 9 galaxies in the Fornax and Eridanus clusters using a 1024^2-pixel HgCdTe array. We used improved analysis techniques to remove contributions from globular clusters and background galaxies, and we assess the relative importance of other sources of residual variance. We applied the improved methodology to Fornax and Eridanus images and to previously published Virgo cluster data. Apparent fluctuation magnitudes were used in conjunction with Cepheid distances to M31 and the Virgo cluster to calibrate the K' SBF distance scale. We find the absolute fluctuation magnitude MK'= -5.61+/-0.12, with an intrinsic scatter to the calibration of 0.06 mag. No statistically significant change in MK' is detected as a function of (V-I). Our calibration is consistent with constant age and metallicity stellar population models. The lack of a correlation with (V-I) in the context of the stellar population models implies that elliptical galaxies bluer than (V-I)=1.2 have SBFs dominated by younger (5-8 Gyr) populations. K' SBFs prove to be a reliable distance indicator as long as the residual variance from globular clusters and background galaxies is properly removed. Also, it is important that a sufficiently high S/N ratio be achieved to allow reliable sky subtraction because residual spatial variance can bias the measurement of the SBF power spectrum. (abridged)

Accepted for publication in ApJ, 44 pages, 10 Postscript figures