The purpose of this paper was to identify and compare the underlying design theory of contemporary European and Japanese fashion designers by using the qualitative research method of grounded theory developed by Glaser and Strauss (1967) and Glaser (1978). In this research, four fashion sites-Paris, Milan, London and Tokyo-were selected. The researcher stayed in each site for a period of two to three weeks for the purpose of data collection. A total of 60 fashion designers, educators, students and journalists were interviewed. 53 open-ended design questionnaires were returned by fashion designers and students. 19 on-site observations of fashion designers and educators were done. Grounded theories of fashion designers were synthesized from in-depth interviews, participant observations and questionnaire surveys of fashion designers, students and educators. The results of theory-building research suggested that there were significant differences between the grounded design theories of European and Japanese fashion designers due to their various cultural contexts.