This study examined the views of year 7 students, teacher librarians, and teachers in three state secondary schools in rural New South Wales, Australia, on information literacy and transfer. The aims of the study included the development of a grounded theory in relation to information literacy and transfer in these schools. The study's perspective was sociocultural, and grounded theory was adopted as the method. This paper presents a critical evaluation of the advantages and limitations of grounded theory. The key findings of the study are outlined and discussed. The findings are related to the extent to which students valued information literacy practices and the factors involved in determining whether students were likely to transfer information literacy practices across time and school subjects. The study identified three groups of students: (1) a minority, who were engaged in their own learning, valued information literacy practices, and were likely to transfer these practices; (2) a majority, who could potentially be engaged in their own learning and who valued information literacy practices in principle, but were unlikely to transfer these practices without intervention by a teacher or teacher librarian; and (3) a very small minority, who failed to grasp the concepts of learning or information literacy practices and could not transfer such practices. The study also found that the lack of a culture of transfer in the schools was a significant hindrance in developing students as transferrers. The findings are discussed and a grounded theory of information literacy and transfer is presented. (Contains 3 figures.)