The purpose of this grounded theory was to discover the process of undergraduate students' music teacher identity development in the first 2 years of their preservice music education program. Participants in this study were 21 undergraduate students from an introduction to music education course. We collected multiple types of data, including interviews and written artifacts, from a course-based undergraduate research experience that focused on music teacher identity development. Consistent with Charmaz's approach, data collection and analysis were grounded in a constructivist paradigm. We analyzed participants' music teacher identity development in a cyclical, three-phase process during the early years of their undergraduate teacher education programs. The three phases involved (a) outer experiences and interactions, (b) inner reflective processes, and (c) actions based on their reflections. The phases were situated within the context of participants' developing sense of self. Central to this process was the students' personal development, particularly as individuals in the stage of late adolescence.