School grades are among the most common measurements used to analyze equality of outcome in education. Large or increasing ‘gaps’ in school grades between boys and girls and between students with different migration background are considered strong indicators of inequality. Based on students’ school grades, several studies have shown that equality in Swedish schools has decreased during the last two decades. Although equality has been described as one of the most important goals in physical education (PE), studies that focus on equality of outcome are lacking. Moreover, there have been no studies that focus on equality of outcome since the 2011 implementation of a new school grading system in Sweden. Therefore, the aim of this study is to contribute with new knowledge on equality in PE in Sweden – in regard to gender and migration background. The study is based on register data for all students enrolled in Swedish schools during the years 2012–2016 from Grades 6 and 9 and Year 1 in upper secondary school N = 1,294,990). Based on a cross-sectional approach, analyses were conducted to explore general trends in students’ school grades in PE in the study period 2012–2016, and to calculate the percentage difference in PE grades between students with a Swedish background and both students with a foreign background and foreign-born students. After controlling for grade inflation, regression analyses with Wald tests were used to analyze how gender has moderated the relationship between migration background and school grades in PE in Sweden between 2012 and 2016. The results from this study suggest that (a) the intersection of gender and migration background is related to unequal school grades in PE, (b) there are gender equality issues in relation to students’ school grades in PE and, (c) the most prominent equality issues concern the group foreign-born girls.