Within the United Kingdom and internationally, the practice of separating pupils by ability endures as a characteristic feature of mathematics and science classrooms. Although there is extensive international research literature on ability grouping within classroom-based subjects, limited research exists in the context of physical education (PE). The purpose of this paper is to explore ability grouping in PE in North East of England schools. Specifically, the paper examined the prevalence of setting and within-class ability grouping in PE, the contexts of its use, how sets and within-class ability grouping were established, and the rationales used to justify decisions about setting and within-class ability grouping in the subject. Data were collected via a web-based survey. The electronic survey was sent to 194 PE Heads of Department from North East of England schools catering for pupils in Key Stage 3 (ages 11–14) and/or Key Stage 4 (ages 14–16). The results indicated that setting is embedded in the organisational and pedagogical practices of PE in many secondary schools. Ability also served as a basis upon which to organise pupils within mixed-ability and setted PE lessons. A variety of other factors, including friendship and behaviour, were also reported as factors influencing grouping of pupils in PE lessons. Our discussion directs attention to issues arising for policy and practice in PE and points to the merits of further exploration and analysis of between-class and within-class grouping practices in the subject.