Abstract The purpose of this article is to describe the development, components and properties of a publication indicator that the Ministry of Education and Culture in Finland uses for allocating direct core funding annually to universities. Since 2013, 13% of the core funding has been allocated on basis of publication indicator that, like the Norwegian model, is based on comprehensive national level publication data that is currently provided by the VIRTA publication information service. In 2015, the publication indicator was complemented with other components of the Norwegian model, namely, quality-weighted publication counts based on national Publication Forum authority list of the publication channels with ratings established by experts in the field. The funding model allocates around 1.6 billion euros annually to universities with the publication indicator annually distributing over 200 million euros. Besides the funding model, the indicator provides comparable data for monitoring the research performance of Finnish universities, fields and subunits. The indicator may also be used in the universities’ local funding models and research management systems, sometimes even at individual level evaluation. Positive and negative effects of the indicator have been extensively discussed and speculated. Since 2011, the Finnish universities’ productivity appears to have increased in terms of both quantity and quality of publications.