Staff perceptions of challenging behaviour and other "challenging problems" in their work with people with learning disabilities are likely to have a significant influence on how they respond to clients and to interventions by Clinical Psychologists. However, accounts of staff perceptions have failed to produce a coherent theory grounded in the experience of staff themselves. The aim of the present study was to develop a theory of how staff describe and explain challenging problems. Grounded theory methodology was used. Ten Support Workers and eight Home Managers in residential learning disability services described their understanding of a challenging problem in relation to a client during senustructured interviews. Client behaviour was the most commonly cited problem. Results suggested that staff face dilemmas concerning whether to see behaviour as communication or a behaviour problem, how to balance firm responding with kindness, and how to deal with their unpleasant feelings evoked by the work. A theoretical account of the results suggested that staffs' emotional distance from or closeness to a client determines how they resolve the dilemmas. The theoretical account should be subjected to further testing. It implies that staff need to be aware of their emotions and personal motivations in their work if they are to resolve the work dilemmas in the best interests of clients. Clinical Psychologists may be well placed to facilitate personal development programmes for staff to foster this awareness.