Percival Bailey is remembered for his collaborative work with Harvey Cushing, and his important work involving the classification of brain tumors, which prior to his research was in a state of disarray and confusion. From 1922 to 1925, Bailey performed extensive pathological and histological studies of brain tumors, and based on cellular configuration, he created a classification system of thirteen categories. In 1927, he reduced the number of categories to ten.
In 1925, Bailey identified a mid-cerebellar glioma that is usually associated with childhood called a medulloblastoma, of which he published an important paper with Cushing titled Medulloblastoma Cerebelli. The two doctors are credited with coining the term "hemangioblastoma".
With Paul Bucy (1904-1992), Bailey made investigations involving the structure of intracranial tumors and meningeal tumors. The two men were able to confirm that a specific type of tumor (now known as an oligodendroglioma) consisted of oligodendroglia. With Gerhardt von Bonin (1890-1979), Bailey authored two works, "The Neocortex of the Chimpanzee" in 1950 and "The Isocortex of Man" in 1951, which provided an accurate description concerning the cytoarchitecture of the cerebral cortex.
As a psychiatrist, Bailey was a vocal critic of Freudian psychology, which he considered speculative and unscientific. In 1965, he published a book about Freud titled "Sigmund The Unserene".