This paper introduces key concepts in the field of moral stage development and presents highlights from a long-term research project on moral discussion, and, particularly, on the role of transactive discussion in moral development. The main objective of the research was to identify those features of moral discussion (defined as transactive) that differentiate developmental discussion from non-developmental discussion. Transactive discussion is the label used to identify a form of verbal interaction which is more simultaneous, mutual, and bi-directional than simple verbal interaction. It is hypothesized that moral stage development results from transactive discussion because each member engages his/her reasoning with the reasoning of the discussion partner. Developmental discussion is interpreted as discussion that results in advancement of an individual from one moral stage to another, as determined by changing scores from a moral development pre-test to a posttest. Non-developmental discussion is interpreted as discussion which does not result in any such change. The document is presented in two sections. In section I, concepts, theories, vocabulary, and literature on stage transition in moral development are examined. Topics discussed include Lawrence Kohlberg's theory of moral development, stages of moral reasoning, stage transition, models of stage variability, moral education strategies, and moral discussion analysis. In this section, a chronological narrative of the research project is also presented. In section II, a detailed description of the manual used to code moral dialogue throughout the research project is presented and some data on analysis of peer counseling skills are cited. Also included in this section are implications for further research, including that transactive dialogue research should consider the communication skills of participants in moral education programs. (DB)