Monitoring inequalities in health is fundamental to the equitable and progressive realization of universal health coverage (UHC). A successful approach to global inequality monitoring must be intuitive enough for widespread adoption, yet maintain technical credibility. This article discusses methodological considerations for equity-oriented monitoring of UHC, and proposes recommendations for monitoring and target setting. Inequality is multidimensional, such that the extent of inequality may vary considerably across different dimensions such as economic status, education, sex, and urban/rural residence. Hence, global monitoring should include complementary dimensions of inequality (such as economic status and urban/rural residence) as well as sex. For a given dimension of inequality, subgroups for monitoring must be formulated taking into consideration applicability of the criteria across countries and subgroup heterogeneity. For economic-related inequality, we recommend forming subgroups as quintiles, and for urban/rural inequality we recommend a binary categorization. Inequality spans populations, thus appropriate approaches to monitoring should be based on comparisons between two subgroups (gap approach) or across multiple subgroups (whole spectrum approach). When measuring inequality absolute and relative measures should be reported together, along with disaggregated data; inequality should be reported alongside the national average. We recommend targets based on proportional reductions in absolute inequality across populations. Building capacity for health inequality monitoring is timely, relevant, and important. The development of high-quality health information systems, including data collection, analysis, interpretation, and reporting practices that are linked to review and evaluation cycles across health systems, will enable effective global and national health inequality monitoring. These actions will support equity-oriented progressive realization of UHC.