This action research study focused on how various grouping strategies influenced preservice teachers' differentiation of instruction. The participants included a third grade mentor teacher and three preservice teacher candidates. The candidate preparation curriculum consisted of seminars, daily field-based learning experiences, and ongoing assessment within a professional development school. The teacher candidates gave students a math pretest over the objectives that were to be addressed during the nine weeks of the study. The results of the pretest, scores from a state practice test, and students' independence levels were used to place students in one of three groups that represented different achievement levels. During the first three-week phase, each of the teacher candidates planned and taught their math lessons to one of the three homogeneous groups. During the second three-week phase, each of the teacher candidates planned and taught a math lesson to all of the three homogeneous groups who rotated through their teaching station. The sequence of group rotations was intentional because the candidates had an immediate experience of teaching fractions to different homogeneous groups of students, comparing lowest ability with highest ability. During the final three-week phase, each of the teacher candidates taught a heterogeneous group. Throughout the three phases, the mentor teacher videotaped lessons each day, and collected lesson plans with candidate reflections. All of the data were analyzed using the Classroom Instructional Practice Scale and the William and Mary Classroom Observation Scales. Results indicated that grouping influenced the candidates' awareness of differences between and within the groups. When advanced students were in the group, the candidates were more likely to use critical and creative thinking strategies. While the candidates planned different learning activities for students in homogeneous groups during the second three-week phase, they tended to plan the same activities for the group and ignored individual differences within the group. During the third phase when the candidates were teaching the heterogeneous group, they provided additional activities for students who finished early or used assessments to guide their instruction. [The dissertation citations contained here are published with the permission of ProQuest LLC. Further reproduction is prohibited without permission. Copies of dissertations may be obtained by Telephone (800) 1-800-521-0600. Web page: http://www.proquest.com/en-US/products/dissertations/individuals.shtml.]