This article addresses a gap in the literature by developing a theory that bridges lesson study and self-efficacy. Since self-efficacy has been linked to student achievement, the theory is important as an explanatory mechanism linking lesson study to student achievement. The theory was developed using grounded theory based on primary source data primarily from planning and debriefing meetings. The theory demonstrates that lesson study is linked to self efficacy through a content continuum which implies that issues from pedagogical content knowledge to deeper conceptual matters can be addressed. It also implies that constraints arising in lesson study are most frequently limitations of pedagogical content knowledge which can be mitigated by a community of practice that provides appropriate resources and subject expertise. (Contains 3 figures.)