The goal of this study was to assess the validity of the International Classification of Disease, 10th Version (ICD-10) administrative hospital discharge data and to determine whether there were improvements in the validity of coding for clinical conditions compared with ICD-9 Clinical Modification (ICD-9-CM) data. We reviewed 4,008 randomly selected charts for patients admitted from January 1 to June 30, 2003 at four teaching hospitals in Alberta, Canada to determine the presence or absence of 32 clinical conditions and to assess the agreement between ICD-10 data and chart data. We then re-coded the same charts using ICD-9-CM and determined the agreement between the ICD-9-CM data and chart data for recording those same conditions. The accuracy of ICD-10 data relative to chart data was compared with the accuracy of ICD-9-CM data relative to chart data. Sensitivity values ranged from 9.3 to 83.1 percent for ICD-9-CM and from 12.7 to 80.8 percent for ICD-10 data. Positive predictive values ranged from 23.1 to 100 percent for ICD-9-CM and from 32.0 to 100 percent for ICD-10 data. Specificity and negative predictive values were consistently high for both ICD-9-CM and ICD-10 databases. Of the 32 conditions assessed, ICD-10 data had significantly higher sensitivity for one condition and lower sensitivity for seven conditions relative to ICD-9-CM data. The two databases had similar sensitivity values for the remaining 24 conditions. The validity of ICD-9-CM and ICD-10 administrative data in recording clinical conditions was generally similar though validity differed between coding versions for some conditions. The implementation of ICD-10 coding has not significantly improved the quality of administrative data relative to ICD-9-CM. Future assessments like this one are needed because the validity of ICD-10 data may get better as coders gain experience with the new coding system.