Background: Recent changes in psychiatric care and teaching that limit patient contact for medical students can be overcome in part by simulation-based education. Understanding the learning processes of medical students involved in psychiatric simulation-based programmes could usefully inform efforts to improve this teaching. This study explored the learning processes of medical students the first time they role-play in psychiatry. Methods: We used constructivist grounded theory to analyse semi-structured interviews of 13 purposively sampled medical students and the six psychiatrists who trained them. To improve the triangulation process, the results of this analysis were compared with those of the analyses of the role-play video and the debriefing audio-tapes. Results: Five organising themes emerged: improving the students’ immediate perception of patients with mental disorders; cultivating clinical reasoning; managing affect; enhancing skills and attitudes and fostering involvement in learning psychiatry. Conclusion: Results suggest that psychiatric role-playing can improve students’ progressive understanding of psychiatry through the development of intuition and by allaying affects. Emotional elaboration and student involvement appear to be key features.