Background. Nurses in a graduate programme in Australia are those who are in the first year of clinical practice following completion of a 3-year undergraduate nursing degree. When working in an acute care setting, they need to make complex and ever-changing decisions about patients' medications in a clinical environment affected by multifaceted, contextual issues. It is important that comprehensive information about graduate nurses' decision-making processes and the contextual influences affecting these processes are obtained in order to prepare them to meet patients' needs. Aim. The purpose of this paper is to report a study that sought to answer the following questions: What are the barriers that impede graduate nurses' clinical judgement in their medication management activities? How do contextual issues impact on graduate nurses' medication management activities? The decision-making models considered were: hypothetico-deductive reasoning, pattern recognition and intuition. Methods. Twelve graduate nurses who were involved in direct patient care in medical and surgical wards of a metropolitan teaching hospital located in Melbourne, Australia participated in the study. Participant observations were conducted with the graduate nurses during a 2-hour period during the times when medications were being administered to patients. Graduate nurses were also interviewed to elicit further information about how they made decisions about patients' medications. Results. The most common model used was hypothetico-deductive reasoning, followed by pattern recognition and then intuition. The study showed that graduate nurses had a good understanding of how physical assessment affected whether medications should be administered or not. When negotiating treatment options, graduate nurses readily consulted with more experienced nursing colleagues and doctors. Study limitations. It is possible that graduate nurses demonstrated a raised awareness of managing patients' medications as a consequence of being observed. Conclusions. The complexity of the clinical practice setting means that graduate nurses need to adapt rapidly to make sound and appropriate decisions about patient care.