OBJECTIVE: The objective of this study was to develop the classification system for version of the SF-6D (SF-6Dv2) from the SF-36v2. SF-6Dv2 is an improved version of SF-6D, one of the most widely used generic measures of health for the calculation of quality-adjusted life years. STUDY DESIGN AND SETTING: A 3-step process was undertaken to generate a new classification system: (1) factor analysis to establish dimensionality; (2) Rasch analysis to understand item performance; and (3) tests of differential item function. To evaluate robustness, Rasch analyses were performed in multiple subsets of 2 large cross-sectional datasets from recently discharged hospital patients and online patient samples. RESULTS: On the basis of factor analysis, other psychometric evidence, cross-cultural considerations, and amenability to valuation, the 6-dimension classification used in SF-6D was maintained. SF-6Dv2 resulted in the following modifications to SF-6D: a simpler classification of physical function with clearer separation between levels; a more detailed 5-level description of role limitations; using negative wording to describe vitality; and using pain severity rather than pain interference. CONCLUSIONS: The SF-6Dv2 classification system describes more distinct levels of health than SF-6D, changes the descriptions used for a number of dimensions and provides clearer wording for health state valuation. The second stage of the study has developed a utility value set using discrete choice methods so that the measure can be used in health technology assessment. Further work should investigate the psychometric characteristics of the new instrument.