Setting priorities for research should be conducted in order to make the most efficient use of scarce resources. Yet the uptake in practice of such methods by researchers and commissioners of research alike has been slow, in part because the methodologies available to do so have not been widely disseminated. This paper argues that an appropriate priority-setting methodology should meet the objectives of the health system, that is to provide the most health benefits to the population that it serves within the budget constraint and while respecting equity. considerations. A condition for these criteria to be met is to construct and operationalise an appropriate definition of the value of research. Five different ways that have been used in practice to value research and set priorities were reviewed. Shortcomings in the ways research is valued make it unlikely that the application of subjective methods, burden of disease methods, and clinical variations and payback methods meet the objectives of the health system. Using the fifth method, value of information, priority-setting can meet the objectives of the health system because it expresses the value of research using the same overall cost-effectiveness framework that is employed for decisions on service provision. However, this method still requires further work to evaluate how research outcomes can then be communicated to clinical practitioners and how practitioners can be encouraged to implement them. (C) 2003 Elsevier Ireland Ltd. All rights reserved.