Benchmarking of the performance of states, provinces, or districts in a decentralised health system is important for fostering of accountability, monitoring of progress, identification of determinants of success and failure, and creation of a culture of evidence. The Mexican Ministry of Health has, since 2001, used a benchmarking approach based on the WHO concept of effective coverage of an intervention, which is defined as the proportion of potential health gain that could be delivered by the health system to that which is actually delivered. Using data collection systems, including state representative examination surveys, vital registration, and hospital discharge registries, we have monitored the delivery of 14 interventions for 2005-06. Overall effective coverage ranges from 54.0% in Chiapas, a poor state, to 65.1% in the Federal District. Effective coverage for maternal and child health interventions is substantially higher than that for interventions that target other health problems. Effective coverage for the lowest wealth quintile is 52% compared with 61% for the highest quintile. Effective coverage is closely related to public-health spending per head across states; this relation is stronger for interventions that are not related to maternal and child health than those for maternal and child health. Considerable variation also exists in effective coverage at similar amounts of spending. We discuss the implications of these issues for the further development of the Mexican health-information system. Benchmarking of performance by measuring effective coverage encourages decision-makers to focus on quality service provision, not only service availability. The effective coverage calculation is an important device for health-system stewardship. In adopting this approach, other countries should select interventions to be measured on the basis of the criteria of affordability, effect on population health, effect on health inequalities, and capacity to measure the effects of the intervention. The national institutions undertaking this benchmarking must have the mandate, skills, resources, and independence to succeed.