Nursing was rated as lowest of all 72 subjects reviewed in the 1992 assessment of research in British universities. Of the 29 academic nursing departments assessed, 17 received the lowest possible rating and only five were given an average or above average rating. Immediate coverage of these results in the nursing press was slow and superficial, and sometimes misleading. This paper explains how the Research Assessment Exercise (RAE) was carried out. It is argued that academic nursing departments are crucial to the profession in its current pursuit of an improved research capability and productivity and, therefore, that the results of the RAE should be of interest and concern to nurses. The analysis presented of nursing's results shows that the larger, longer-established departments based in research-strong old universities have more research-active staff, and it was these departments that received the best ratings in the RAE. In contrast, most of the nursing departments assigned the lowest possible rating were small, recently established departments in ‘new’ universities that could not have been expected to distinguish themselves in their first research assessment. It is suggested, however, that any new academic nursing departments should be strategically placed in research-strong universities. Although this paper is concerned with nursing in British universities, the general notion of research funding being allocated on the basis of performance is (or is likely to become) pertinent to other countries, especially those in Europe, North America and Australasia.