Context specificity and the impact that contextual factors have on the complex process of clinical reasoning is poorly understood. Using situated cognition as the theoretical framework, our aim was to evaluate the verbalized clinical reasoning processes of resident physicians in order to describe what impact the presence of contextual factors have on their clinical reasoning. Participants viewed three video recorded clinical encounters portraying straightforward diagnoses in internal medicine with select patient contextual factors modified. After watching each video recording, participants completed a think-aloud protocol. Transcripts from the think-aloud protocols were analyzed using a constant comparative approach. After iterative coding, utterances were analyzed for emergent themes with utterances grouped into categories, themes and subthemes. Ten residents participated in the study with saturation reached during analysis. Participants universally acknowledged the presence of contextual factors in the video recordings. Four categories emerged as a consequence of the contextual factors: (1) emotional reactions (2) behavioral inferences (3) optimizing the doctor patient relationship and (4) difficulty with closure of the clinical encounter. The presence of contextual factors may impact clinical reasoning performance in resident physicians. When confronted with the presence of contextual factors in a clinical scenario, residents experienced difficulty with closure of the encounter, exhibited as diagnostic uncertainty. This finding raises important questions about the relationship between contextual factors and clinical reasoning activities and how this relationship might influence the cost effectiveness of care. This study also provides insight into how the phenomena of context specificity may be explained using situated cognition theory.