This study was designed as an effort to understand how student-directed small-group discussions can further student thinking about issues related to social studies. The study utilized participant observation to collect data two to three times weekly as students engaged in a literature-based reading program called Book Club. The specific questions the study addressed were: (1) what topics will students be able to pursue as they engage in opportunities to read and discuss trade books that focus on social studies issues; and (2) which issues are better handled through instruction led by the teacher? The study was conducted in an urban school, within two classrooms, one a fourth/fifth-grade split and the other a fifth-grade classroom. Observations were conducted during discussions centered around historical fiction. Early in the unit, students read books about Japanese people and animals before, during, and after the bombing of Hiroshima and Nagasaki. Later in the unit students read about Europe during World War II. The data collected included a series of transcripts of students' oral discussions, field notes, and interviews. Student discussions are analyzed in order to determine the degree to which students had developed certain social studies skills and knowledge. The following skills and knowledge areas are among those on which the study focused: map-reading skills, knowledge of cultural differences, knowledge of weapons, identification with main characters, and empathizing with cultural differences. Findings revealed that (1) students often introduced issues included within the social studies curricula based on their own interests; (2) students were capable of expanding ideas within the Book Club groups; (3) teachers need not dominate student interactions to insure that they comprehend important issues; and (4) instructional support could have furthered students' understanding of some key issues related to social studies education. A list of 52 sources is appended. (DB)