In recent years public sector organisations in New South Wales have been subjected to changes in their operating environments. Changes have included micro-economic reforms by Government and changes in stakeholders' expectations of how public sector organisations manage their affairs. The need to deal with the increasing number and diversity of issues arising, has motivated public sector managers to become increasingly involved in strategic management. The focus of this research was to study how strategic issues were processed within the context of their approach to strategic management. Strategic issue management has been proposed as an appropriate management system for use in conditions of moderate to high levels of environmental turbulence as a means to providing a mechanism for real time response to emerging issues. Three of the four organisations in the study indicated a progressive increase in perceptions of environmental turbulence over a six year period to points mid way between the 'Changing' and 'Discontinuous' levels on the Ansoff and McDonnell (1990) environmental turbulence scale. Research findings indicted that all four public sector organisations undertake a form of strategic issue management which is separate to the periodic strategic planning cycle. In answer to the criticism of the theoretical void which is seen to exist in linking organisational response to changes in the environment, theoretical models were developed for the Sensing, Deciding and Executing functions of the processing dimension of Ansoff's (1987) proposed paradigm of emerging strategic behaviour. The models provide the framework for tracking how eight strategic issues were processed in four public sector organisations. Field research-was conducted over a fifteen month period collecting both secondary and primary data. A case study research methodology was developed for the project following a review of the relevant literature. There were clear indications that the Sensing, Deciding and Executing functions were performed and that the issues under study passed through numerous phases during their processing cycles. The interconnected and iterative nature of issue processing across the Sensing, Deciding and Executing phases were demonstrated in the research findings.