Problem based learning (PBL) has been widely used in the United States, United Kingdom and Australasia in undergraduate nursing education to develop critical thinking and problem solving skills. PBL has been used since 1996 in a Bachelor of Nursing course at a New Zealand tertiary institution, and several modifications have been made to foster effective learning. The 'pure' PBL process has been adapted to move students gradually from teacher direction to taking responsibility for their learning. This has provided the opportunity for students to develop critical thinking, problem solving, information retrieval and evaluation skills, and group process skills over an 18-week period. Because rigorous evaluation of these changes had not been formally undertaken, the purpose of this study was to evaluate how the current format was developing students' understanding and integration of knowledge. Two cycles of the action research method (Cardno and Piggot-Irvine, 1994) were used, involving 4 lecturers and 17 students. Data was collected both quantitatively and qualitatively over a 16-week period. Findings indicated the importance of: explaining the purpose and process of PBL; communicating in detail the role of both students and lecturers; keeping communication lines open; addressing timetabling issues and valuing this method of learning for nursing practice. Implications for nursing education are addressed.