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The purpose of this study was to understand how four exemplary fourth- and fifth-grade elementary teachers differentiated reading instruction using a constructivist approach to grounded theory methodology. In particular, the factors influencing and nature of their differentiated reading instruction was investigated using interviews and observations. The findings revealed that the key factors considered included a teacher’s teaching philosophy, teaching context and analysis of data, which in turn, impacted the nature of differentiated instruction regarding three classroom aspects: content (e.g., state standards), processes (e.g., physical setting, instructional format, and materials), and products (e.g., organic and formal evaluation). Implications are discussed for teachers regarding a continuum of support structures to assist in the differentiation process and suggestions offered for additional research.