Introduction: Grounded theory has become one of the most important interdisciplinary methods of research because of its attention to social interactions and investigation of hidden processes in social behaviors. This study aimed to explain observation as a tool in grounded theory and to place this data collection method parallel to interviews in terms of importance.Method: This was a narrative review of the literature. First, the available databases (Google Scholar, PubMed, SID, and Magiran) were searched using the keywords observation, qualitative study, and grounded theory, and the indicators AND and OR. As a result, 21 books, 2 professional websites, and 38 articles in English and 18 in Farsi were retrieved. After the final revision, 6 books, and 10 articles in English and 4 in Farsi, which discussed the nature and scope of observation in qualitative studies, were included in the review.Results: Studies show that although interview is the most important and perhaps the most practical tool for collecting data in grounded theory studies, this method cannot always help the researcher to investigate a social phenomenon from different perspectives. Awareness of observation method, ability of the observer, the pros and cons of observation, ethics of observation, and applied guidelines for observation are issues which can help qualitative researchers who adopt symbolic interactionism as theoretical perspective in their qualitative inquiry.Conclusion: Conducting precise observation through which the researcher is totally immersed in the phenomenon under study with curiosity, application of scientific observation principles and methods, as well as employment of in-depth interviews can help qualitative researchers to discover social processes hidden in human interactions.