This paper presents a method to predict the permanent deformation (rutting) in pavements using a mechanistic-empirical model of material characterization. Three permanent deformation parameters are developed through material testing to simply represent the curved relationship between permanent strains and the number of load cycles. Equations are developed by regression analysis which determine how these three parameters are affected by the material properties, environmental conditions (moisture and temperature), and stress state. These relations are important in calculating the permanent deformation of pavement layers since the relation between permanent deformation and cycles of load from the laboratory is usually examined in test conditions that are significantly different from field conditions. The permanent deformations calculated from the method presented are compared with results measured in the field in Florida and are found to be accurate. The permanent deformation is calculated as the sum of the resilient strains multiplied by the fractional increase of total strains for each material layer of the pavement. The resilient strains of pavement structures under highway loadings are calculated using a finite-element analysis which incorporates both linear and nonlinear stress-strain behavior of the pavement component materials. The fractional increase of total strains is basically in terms of three parameters which characterize the permanent deformation relations from the laboratory. The values of these parameters are developed for pavement materials such as asphalt concrete, gravel and crushed-stone base course materials, and subgrade soils from a variety of data sources. The statistical equations for the three parameters are developed for each type of material represented in the data. The most important terms in the equations are the asphalt content, temperature, resilient modulus, and stress state for asphalt concrete material, and the water content, resilient modulus, and stress state for base and subgrade soils, respectively. These equations and the method as mentioned above has been programmed into a modified ILLI-PAVE program to calculate the resilient strains and permanent deformation in each layer of pavement, taking into account realistic distributions of tire contact pressures, both vertical and horizontal. The permanent deformation obtained is shown to be in reasonable agreement with the measured results. It is demonstrated that this method provides an appropriate and realistic analysis of prediction of the permanent deformation, and further, the results are used in the prediction of the loss of serviceability index of pavements using the American Association of State Highway and Transportation Officials (AASHTO) Road Test relation. The paper demonstrates the importance of accurate materials characterization in predicting the rutting of asphalt concrete pavements on granular base course.