Background: Grade inflation is a growing concern, but the degree to which it continues to exist in 3rd-year internal medicine (IM) clerkships is unknown. Purpose: The authors sought to determine the degree to which grade inflation is perceived to exist in IM clerkships in North American medical schools. Methods: A national survey of all Clerkship Directors in Internal Medicine members was administered in 2009. The authors assessed key aspects of grading. Results: Response rate was 64%. Fifty-five percent of respondents agreed that grade inflation exists in the Internal Medicine clerkship at their school. Seventy-eight percent reported it as a serious/somewhat serious problem, and 38% noted students have passed the IM clerkship at their school who should have failed. Conclusions: A majority of clerkship directors report that grade inflation still exists. In addition, many note students who passed despite the clerkship director believing they should have failed. Interventions should be developed to address both of these problems.