Background: Developing moral competency is a main aim of educational systems, especially in healthcare-related disciplines. Purpose: The aim of this study was to explore the moral development process in nursing students. Methods: This study used a constructivist grounded theory. Twenty-five semistructured, face-to-face interview with 22 participants were conducted to gather the data. The participants were nursing students and educators attending three nursing schools in Tehran. Results: Moral development evolves within nursing students following a stepwise progression. Within each step or phase, students experience specific changes with regard to both their practical skills and their moral capabilities and competencies. Three main steps were identified: moral transition, moral reconstruction, and moral internalization. Technoscientific competence, biomedical competence, and nursing competence are developed in each step, respectively. Conclusions/Implications for Practice: Moral competency in nursing students develops along with their competency as nursing practitioners. To facilitate progress through each phase, it needs to be ensured that the learning experiences that students are exposed to during each consecutive year of study facilitate as much as possible the development of moral competence.