To evaluate the fault severity of rolling element bearings with inner and outer race defects, a measure based on EMD and Lempel-Ziv index was proposed. EMD was used to decompose the signal into meaningful components, from which the best IMF could be found according to the energy and kurtosis conditions. On the base of the best IMF, the normalized Lempel–Ziv values were calculated for both the envelope and high-frequency carrier signal. Then the two values were summed with given weights to form a final measure named the integrated Lempel–Ziv index. The method is suitable for uncovering the real inside of bearing deterioration due to EMD, and the index itself is robust as well as the normalized value between 0 and 1 can be easily used. The inner and outer race fault experiments show that the integrated Lempel–Ziv value is increasing as the outer race fault grows, and the other obtains an opposite trend. The new index can be used as a fault severity measure for rolling element bearings effectively according to the Lempel–Ziv ranges indicating degrees of faults which are also presented in this paper.