Aim. This is a report of a study investigating processes used by final-year nursing students to recognize and act on clinical cues of deterioration in a simulated environment. Background. Initial decisions about patients who are deteriorating in medical and surgical wards are often made by newly qualified nurses and doctors, increasing the risk of clinical error. There has been an emphasis on the use of teams in simulation; however, signs of deterioration are missed by individual clinicians. Methods. During July 2008, final-year undergraduate nursing students in Australia attended a simulation laboratory for 1Æ5 hours and completed a knowledge questionnaire and two (mannequin-based) scenarios simulating deteriorating patients with hypovolaemic and septic shock. Scenarios were video-recorded and reflective interviews conducted. Additionally, scenarios were stopped around the midpoint to ascertain students’ level of Situation Awareness. Results. Fifty-one students participated in the study, providing a total of 102 videoed scenarios and 51 interviews. Thematic analysis of video data and reflective interviews identified considerable differences in processes used by students to identify cues. Four aspects of cue recognition were evident: initial response, differential recognition of cues, accumulation of signs and diversionary activity. Conclusion. Nursing skills training should emphasize the importance of trends in identifying and acting on deterioration and the need for systematic assessment in stressful situations. Nursing curricula should focus on enhancing the ability to piece information together, including linking pathophysiology with patient assessment, and identify trends, rather than seeing observations as parallel to each other.