One of the key issues in the development of an earthquake recurrence model for California and adjacent portions of Nevada and Mexico is the comparison of the predicted rates of earthquakes with the observed rates. Therefore, it is important to make an accurate determination of the observed rate of M>6.5 earthquakes in California and the adjacent region. We have developed a procedure to calculate observed earthquake rates from an earthquake catalog, accounting for magnitude uncertainty and magnitude rounding. We present a Bayesian method that corrects for the effect of the magnitude uncertainty in calculating the observed rates. Our recommended determination of the observed rate of M>6.5 in this region is 0.246 ? 0.085 (for two sigma) per year, although this rate is likely to be underestimated because of catalog incompleteness and this uncertainty estimate does not include all sources of uncertainty.