Canadian dimension lumber is manufactured to conform to grading rules meeting Canadian and US requirements. Each piece of lumber is inspected to determine its grade and a stamp is applied indicating the assigned grade, the mill of origin, a green or dry moisture content at time of manufacture, the species or species group, and the grading authority having jurisdiction over the mill of origin.

Lumber has traditionally been graded by visual inspection. The grade of a given piece of lumber is based on visual observation of such characteristics as slope of grain and the location of knots. Most softwood lumber is assigned either an appearance grade or a structural grade based on visual review by a lumber grader who is an integral part of the lumber manufacturing process. Based on correlation between appearance and strength, lumber graders are trained to assign a strength grade to lumber based on appearance criteria such as the presence of wane (bark remnant on the outer edge), presence, size and location of knots, the slope of the grain relative to the long axis and several others. The table below shows a sample of a few of the criteria used to asses grade for a 2x4 as structural light framing or as a structural joist and plank.

Dimension lumber is generally grade stamped about 600mm (2') from one end of each piece so that the stamp will be clearly visible during construction. (Specialty items such as lumber manufactured for millwork or for decorative purposes are seldom marked).

To keep sorting cost to a minimum grades may be marketed by being grouped together. For example, there is an appearance difference between No.1 and No.2 Canadian dimension lumber but not a strength difference. Therefore the product mix No.2 and better is commonly used where the appearance of No.1 grade lumber is not required, as, for example, in the case of joists and rafters or trusses.

Unless regraded, graded lumber should not be ripped or resawn lengthwise for engineered applications. This changes the location of knots and grain slope relative to the areas ot high stress concentration and therefore changes the grade.