Introduction: Governments and professional organizationshave called for new partnerships between health care providersand academics to improve clinical education for the benefit ofboth students and patients. To develop a substantive groundedtheory on the process of forming academic-service partnershipsin implementing clinical education, from the perspective ofacademic and clinical nursing staff members and managersworking in Iranian settings.Methods: The participants included 15 hospital nurses, nursemanagers, nurse educators, and educational managers from twocentral universities and clinical settings from 2009 to 2012. Datawere collected through 30 in-depth, semi-structure interviewswith the individual participants and then analyzed using themethodology of Strauss and Corbin’s grounded theory.Results: Utilizing “balancing power” as the core variableenabled us to integrate the concepts concerning the partnershipprocesses between clinical and educational institutes. Threedistinct and significant categories emerged to explain the processof partnership: 1) divergence, 2) conflict between educational andcaring functions, and 3) creation of balance between educationaland caring functions.Conclusions: In implementing clinical education, partnerships havebeen formed within a challenging context in Iran. Conflict betweenclinical and educational functions was the main concern of bothsides of the partnership in forming a collaborative relationship, withour findings emphasizing the importance of nursing educators’ rolein the establishment of partnership programs.Keywords: Education; Nursing student, Power; Partnership practice