Action research provides an opportunity to implement and understand the process of change in practice settings, as well as develop theoretical insights into complex social situations. The provision of mental healthcare for older people within the general hospital is one such situation, and this paper presents a discussion and reflection on the use of action research in this setting. The background to the project is described, followed by a discussion of three major issues that emerged for us: the extent to which we were able to promote democracy and maintain and demonstrate democratic behaviour, the problems and pitfalls of operationalising grounded theory methodology within an action research approach, and the challenges of developing an authentic and credible account of the care of older people with mental health needs. This paper aims to add to a discourse regarding action research and will be of value to researchers using this approach across a range of health, social care and educational settings. (Contains 1 figure and 1 table.)