In today’s society, knowledge is recognized as a valuable social asset and the educational system is in search of a new strategy that allows them to construct their knowledge and experience. The purpose of this study was to explore the process of knowledge creation in nursing education. In the present study, the grounded theory approach was used. This method provides a comprehensive approach to collecting, organizing, and analyzing data. Data were obtained through 17 semi-structured interviews with nursing faculties and nursing students. Purposeful and theoretical sampling was conducted. Based on the method of Strauss and Corbin, the data were analyzed using fragmented, deep, and constant-comparative methods. The main categories included striving for growth and reduction of ambiguity, use of knowledge resources, dynamism of mind and social factors, converting knowledge, and creating knowledge. Knowledge was converted through mind processes, individual and group reflection, praxis and research, and resulted in the creation of nursing knowledge. Discrete nursing knowledge is gained through disconformity research in order to gain more individual advantages. The consequence of this analysis was gaining new knowledge. Knowledge management must be included in the mission and strategic planning of nursing education, and it should be planned through operational planning in order to create applicable knowledge.