This report describes participant evaluation as a method of studying social phenomena. A review of literature presents participant observation in relation to some of the other techniques of research, e.g., experimentation and statistical surveys using pre-tested questionnaires. Lengthy discussion of seven problem areas of participant observation is presented. These areas concern who should observe, what kind of role should be assigned to the observer, the avoidance of bias, how the observer may test for bias in the data used for conclusions the possibility of operational and basic research in a school system, who determines the final disposition of the research findings, and some moral implications of participant observation. Four helpful tentative suggestions for the participant observer are presented. A 14-item bibliography is included. (MJM)