Based on a nondestructive evaluation (NDE) system, a methodology is described to develop a strength-grading method for wood utility poles. Considerations are given for both economics and engineering design aspects. The proposed NDE-based grading system is calibrated to provide at least the same production economic benefit and structural reliability as currently exist with visually graded poles. However, even with these limitations, an additional reliability and hence an additional economic benefit is derived by enabling a better matching of pole strength with specific design loads. Use of currently rejected poles is possible with the proposed method. The proposed grading system retains the size classification concept currently used by the American National Standard Institute, but would upgrade or downgrade individual poles according to their NDE-predicted strengths. Five strength grades are proposed that are calibrated to recently obtained bending strength data for transmission-size Douglas fir poles.