Case mix classification systems have been adopted in many countries as a method to manage and finance healthcare in acute care settings; the most popular systems are based on diagnosis related groups. The most successful of those case mix systems differentiate patient types by reflecting both the intensity of resources consumed and patient acuity. Case mix systems for use with non-acute hospital activity have not been as wide-spread; other than in the United States, little attention has been directed towards case mix classification for rehabilitation activity. In a province with over 13 million inhabitants with 2496 rehabilitation beds, inpatient rehabilitation is an important component of hospital care in Ontario, Canada, and consists of the spectrum of intensive rehabilitation activities intended to restore function. Although case mix adjusted activity has been the currency in Ontario's Integrated Population Based Allocation hospital funding formula, rehabilitation activity has not been subjected to case mix measurement. A project to examine case mix classification for adult inpatient rehabilitation activity was initiated by the Ontario Ministry of Health and Long-Term Care whose outcome was a case mix system and associated cost weights that would result in rehabilitation activity being incorporated into the hospital funding formula. The process described in this study provides Ontario's provincial government with a case mix classification system for adult inpatient rehabilitation activity although there remain areas for improvement.