Farm animal welfare is ever more important in Europe. Welfare can be defined as the quality of life for animals kept by humans. Animal welfare consists of three components: (i) how the animal is doing in terms of its body functioning, (ii) how it experiences its life psychically and (iii) whether it lives a natural life typical for the species. For commercial systems that strive for higher welfare level than the legal minimum, welfare needs to be quantitatively assessed on farms. This is difficult for two reasons. Firstly, many indicators of welfare can be in principle assessed accurately, but in on-farm conditions, the methods are not practicable. Secondly, it is not easy to decide how much weight the individual indicators should have in the final evaluation. Animal welfare has been so far evaluated based on resource-based measures. The Welfare Quality® system is the first European-wide system based mainly on animal-based indicators. The principles of the system are described.