The aim of this paper is to describe sources of conflict and congruence in critical areas of practice with caregivers of persons with dementia, using cultural-historical activity theory as an analytic framework. Findings are drawn from an ethnographic study that described the context of occupational therapists' (OTs') clinical reasoning in a funded, home-based environmental skill-building program designed to help caregivers manage the daily care of a family member with dementia. Data were gathered through observation of intervention sessions, debriefing sessions, semi-structured interviews with therapists, and review of intervention documentation. Primary sources of conflict and congruence within the identified practice context included conflicts between therapists and caregivers concerning which environmental strategies were best for addressing problems in caregiving and expectations regarding OT and caregiver roles. Areas of congruence included the fit between intervention protocols used to guide treatment and the approaches therapists developed to help caregivers modify care receivers' living environments. The study revealed the complexity of OT practice and demonstrated that practice contexts can be systematically analyzed using cultural-historical activity theory to determine key factors influencing clinical reasoning. The approach also presents an alternative perspective on clinical reasoning that more directly integrates clients/caregivers and therapists as co-constructors of OT intervention.