This research contributes to the existing literature in multiple ways: First, it provides a richer, more nuanced conceptualization of the relationships among lean production, inventory leanness, and financial performance. Specifically, we draw on existing lean production and inventory literature to develop a research model that examines the mediating role of inventory in delivering the commonly expected financial performance benefits of lean production implementation. This model is tested using a data sample with firm-level observations from a diverse set of US manufacturing industries which is compiled from two distinct sources: survey data and matched secondary financial data. Beyond conventional mediation analysis, we also test for potential reverse causality and, thus, gain a better understanding of the interplay of lean production, inventory leanness, and financial performance.