The aim of this paper is to assess the reproducibility of a novel binary grading system (high/low risk) of oral epithelial dysplasia and to compare it with the WHO classification 2005. The accuracy of the new system for predicting malignant transformation was also assessed. Ninety-six consecutive oral epithelial dysplasia biopsies with known clinical outcomes were retrieved from the Oral Pathology archives. A pilot study was conducted on 28 cases to determine the process of classification. Four observers then reviewed the same set of H&E stained slides of 68 oral dysplastic lesions using the two grading systems blinded to the clinical outcomes. The overall inter-observer unweighted and weighted kappa agreements for the WHO grading system were Ks = 0.22 (95% CI: 0.11-0.35), Kw = 0.63 (95% CI: 0.42-0.78), respectively, versus K = 0.50 (95% CI: 0.35-0.67) for the new binary system. Interestingly, all pathologists showed satisfactory agreement on the distinction of mild dysplasia from severe dysplasia and from carcinoma in situ using the new WHO classification. However, assessment of moderate dysplasia remains problematic. The sensitivity and specificity of the new binary grading system for predicting malignant transformation in oral epithelial dysplasia were 85% and 80%, respectively and the accuracy was 82%. The new binary grading system complemented the WHO Classification 2005 and may have merit in helping clinicians to make critical clinical decisions particularly for the cases of moderate dysplasia. Histological grading of dysplasia using established criteria is a reproducible prognosticator in oral epithelial dysplasia. Furthermore, the present study showed that more consensus scoring on either the degree of dysplasia, assessment of risk or the presence of each morphological characteristic by a panel should be encouraged.