Health care reform in Hong Kong in the 1990s has brought about dramatic change to the nursing discipline. This paper reports an ethnographic study which aimed at exploring the transformation of nursing in a regional hospital in Hong Kong during this period of reform. In the study, the restructuring of nursing work, its associated dynamics and resulting impacts upon the nursing profession were examined. A methodological triangulation approach to data collection encompassing interviews, participant observation and review of documents was used. The findings in this study suggest that the majority of nurses working in the case study hospital continue to be subject to medical dominance and are under management control. The emphasis on cost-effective care has however, fostered qualified nurses to claim more ownership of their professional judgement and autonomy. The health care reform has confirmed the status of two newly established groups of nurses, the nurse specialists and nurse managers. The development of the nursing profession is found to be closely connected to its work development. The preparation of the new generation of nurses, as revealed in this study, needs to emphasize the cognitive dimension of the professional competence. Some nurses need to be further educated in specialist practice and clinical management to maximize the contribution of nursing in health care delivery.