Action research is a way to examine purposes and practices in teaching. One way of conducting action research is to engage in participant observation, which may be seen as a systematic attempt to discover the knowledge that a group of people has learned and is using to organize the group's behavior. Participant observation has a great deal of potential for the classroom teacher. The first step is to identify a social situation in which the people, the place, and the activities are observed. A researcher's study of supermarket checkout operators illustrates the application of participant observation, which may be continuous or sampling. In this type of ethnographic research, the researcher is learning from people rather than studying them, so that a relationship of trust is essential. Use of systematic participant observation allows a teacher to: (1) gain insight into what is going on in the class; (2) gain ideas for future lessons; (3) address issues of equity, power, or control; (4) make assessment decisions; (5) look for causal relationships; (6) evaluate teaching practice; and (7) record the language that students use in a precise manner. (SLD)