This paper describes the methodological and theoretical context and underpinnings of a study that examined community psychiatric nurses' work with family caregivers of older people with depression. The study used grounded theory research methods, with its theoretical foundations drawn from symbolic interactionism. The aims of the study were to describe and conceptualize the processes involved when community nurses work and interact with family caregivers and to develop an explanatory theory of these processes. This paper begins with an explanation of the rationale for using grounded theory as the method of choice, followed by a discussion of the theoretical underpinnings of the study, including a brief summary of the nature and origins of symbolic interactionism. Key premises of symbolic interactionism regarded as central to the study are outlined and an analytical overview of the grounded theory method is provided. The paper concludes with a commentary on some of the issues and debates in the use of grounded theory in nursing research. The main purpose of this paper is to provide a methodical and critical review of symbolic interactionism and grounded theory that can help readers, particularly those who are intending to use grounded theory, better understand the processes involved in applying this method to their research.