A study used conversational analysis to examine the reasoning students use in a Problem-Based Learning (PBL) environment as they formulate a theory (in medical contexts, a diagnosis) which accounts for evidence (medical history and symptoms). A videotaped group interaction was analyzed and transcribed. In the segment of interaction examined, the participants considered a theory presented by "Betty," discussed the location of the hippocampus, entertained another theory from Betty, attempted to distinguish a stroke from a transient ischemic attack, and discussed the compatibility of symptoms with Betty's explanations. Betty presented "her" two theories as products of her individual reasoning. However, the "processing" of the theories (including such actions as agreeing, disagreeing, questioning, and modifying) was thoroughly interactional. Findings illustrate the possibilities of close description of PBL interaction and demonstrate conversation analytic description and reasoning. (Contains 18 references.) (RS)