This paper addresses the question of how to develop prospective teachers' pedagogical content knowledge (PCK) in science teacher education. The main focus is on the knowledge transformation process and on the cognitive strategies used to shift prospective teachers' explanations within the domain of modelling thermal physical phenomena. This study investigates the development of PCK within a group of 28 pre-service physics teachers during the first semester of their two-year post-graduate teacher education program. It focuses on the central issue of the relationships between observable phenomena, like macroscopic thermal properties of matter and their interpretation and/or explanation in terms of corpuscular characteristics and/or thermodynamics theory. The strategy is based on the consideration that knowledge transformation is not a one-way process from subject matter knowledge to pedagogical content knowledge, as literature suggests, but a bidirectional process involving deepening of subject matter knowledge and increasing awareness of pedagogical issues.