The performance warranty system is quite innovative in requiring a contractor’s warranty for pavement performance over a certain period of time. European countries adopted performance warranty systems about 40 years ago. The United States adopted this system in the early 1990s to improve construction quality and performance, as well as to reduce life cycle cost. In Korea, for the purpose of resolving construction management and quality control problems and poor construction, the performance warranty system is considered as part of the solution. The appropriate performance indicators, reasonable threshold values, and warranty periods have to be selected in order to adopt a performance warranty system that requires keeping the pavement performance above a certain level of satisfaction for the warranty period. For this reason, structural, functional, and safety performance were defined first, and then rut depth, roughness, and crack ratio were selected as performance warranty indicators. For the purpose of suggesting performance warranty threshold values that reflect domestic circumstances, pavement management system data were surveyed, a special project was conducted, and a total of 888 sample sections were analyzed. A threshold level at 95 % of each indicator’s distress was determined for the threshold value; this prevents the worst 5 % of poor performance cases. A 14-mm rut depth, 3.6 m/km International Roughness Index, and 20 % crack ratio for five years were selected as threshold values. To avoid early deterioration of pavement, three- to five-year warranty periods are suggested.