This paper describes the ways in which a number of individuals, including elementary school children, classroom teachers, and university faculty and staff, collaborated (initially through a literacy discussion group or LDG) over a number of months to develop an interactive hypermedia software program to improve students' literacy. The LDG approached the process of developing the software program as an opportunity for action research, and group members collected data and engaged in analysis to reflect on the processes involved in developing materials for classroom use and on the nature of their collaboration. The paper presents the contexts that led to the collaboration, the ways in which the participants worked together to develop the program, the themes of the collaboration, and suggestions for those considering collaborative projects. Contains 19 references. Attached are a timeline of program development, a look at challenges faced in program development, and information regarding decision making in program development. (NKA)