A minimal basis of a vector space V of n-tuples of rational functions is defined as a polynomial basis such that the sum of the degrees of the basis n-tuples is minimum. Conditions for a matrix G to represent a minimal basis are derived. By imposing additional conditions on G we arrive at a minimal basis for V that is unique. We show how minimal bases can be used to factor a transfer function matrix G in the form , where N and D are polynomial matrices that display the controllability indices of G and its controller canonical realization. Transfer function matrices G solving equations of the form are also obtained by this method; applications to the problem of finding minimal order inverse systems are given. Previous applications to convolutional coding theory are noted. This range of applications suggests that minimal basis ideas will be useful throughout the theory of multivariable linear systems. A restatement of these ideas in the language of valuation theory is given in an Appendix.