This article focuses on methodological issues arising in a study of character development, using illustrations of "sharing behaviours." Based primarily in six early years settings in southeast England the research records naturalistic observations of peer interactions for 55 children aged three to six years. Applying grounded theory to the processes of observing, analysing and interpreting evidence required a cautious and collectively reflective approach. The methodology sought to moderate the influence of the researchers' prior knowledge of "grand theories" of moral development and assumptions about relevance to the observation records. The study's originality lay in the exploration of moral development without reference to any particular grand theory as an explanatory framework; and in the reluctance to be drawn to potentially simplistic rationalisations of the children's intentions on the basis of their observed behaviours. Exploring young children's subjective experiences, this research provides insights into the intricacy of this process, steering away from "neat" findings and attempting to reflect the sophistication of the children's skilful and sometimes surprising negotiations of moral dilemmas. Implications for practice relate to the complexities involved in attempts to unravel the developing moral characters of young children and the practice through which this may be nurtured.