BACKGROUND: Becoming a new graduate nurse is both a complex and stressful transition. Graduates must socialise into the context of nursing practice, become accountable for patient care and ward activities, interact with other health professionals and develop their own clinical expertise. In Australia, many hospitals provide Graduate Year Programmes to assist new graduates to assimilate into their new roles and environments. AIMS: This paper describes a study that explored how graduate nurses develop their knowledge and skills during their graduate programmes, as well as identifies factors assisting or hindering knowledge and skill acquisition. METHODS: Employing a qualitative approach, this study used a series of focus groups and anecdotes to collect data from 25 participants recruited from four different hospitals in Victoria, Australia. Focus groups were conducted between 4 and 6 months, 11 and 12 months into, and 4-6 following completion of the graduate programme. Interview transcripts were analysed allowing feedback to be provided to participants. RESULTS: Six themes emerged from the focus groups analysis that described graduates' knowledge and skill acquisition and reflected their development at the different stages. These were: 'gliding through' during undergraduate studies, 'surviving', 'beginning to understand', and 'sheltering under the umbrella' in the first interview, 'knowing how to', and 'we've come a long way' by the end of their programme. CONCLUSIONS: The year following graduation is one of immense personal and professional development. Despite nurse education being in tertiary settings for many years, preparation of undergraduate students still appears unable to reduce reality shock and ease transition for graduates into their working lives.