The purpose of this study was to describe the meaning of work for nurses employed in two state psychiatric hospitals. Nurses at both hospitals participated in designing and carrying out the research. In Phase I, nurses described situations in which they had been observers or participant observers and the way that they understood what was occurring in the situations described. The data from these descriptions were analyzed in collaboration with small groups of nurse co-investigators at each hospital. In Phase II, patterns of meaning identified in Phase I were checked and further refined based on focus groups and interviews with nurses at both hospitals. The interrelated dilemmas faced by nurses are discussed as (1) challenges in clinical decision making, (2) challenges regarding personal control, and (3) challenges of maintaining professional standards. Ways of meeting these challenges, coping, and making meaning are discussed in a companion article, "Meanings of State Hospital Nursing II: Coping and Making Meaning".