This systematic literature review aims to gain a comprehensive understanding of the opportunities thataction research (AR) provides for initial teacher education and the challenges that teacher educators andpre-service teachers (PSTs) may experience during the AR process. We analyzed 20 empirical studies onAR conducted in initial teacher education programs, adopting a hybrid approach to thematic analysis. Thefindings indicate that AR is a promising practice that helps PSTs to reflect critically, (re)construct theirteacher identity, see students as partners, value collaboration, and (re)conceptualize their understanding ofresearch. However, it is also important to consider the challenges faced during the AR process, such aspracticum restrictions, assessment demands, weak communication between partners, and time constraints.Therefore, it is essential to consider AR within initial teacher education as distinct from in-service ARpractices since the needs and concerns of PSTs might be different in this transitional period of theirlives. Implications are included for initial teacher education programs which are planning to use AR as atool for teacher learning and development