Abstract: The aim of this study was to develop a theory which would explain the consistently low number of Aboriginal people employed in public sector agencies in Australia. Aboriginal people comprise approximately 3 percent of the Australian population and continue to have the highest representation amongst the unemployed and in prisons. Of those Aboriginal employees in the public sector, the majority are amongst the lowest paid ranks. The general aim of this research was to generate a substantive theory that describes issues impacting on the recruitment, selection, promotion and retention of Aboriginal people in public sector agencies, particularly at middle and senior management levels. The specific aims were to identify: cultural factors that impact on Aboriginal people in the workplace; management factors that impact on Aboriginal people in the workplace; expectations of and perceptions about Aboriginal people in the workplace; organisational strategies for the recruitment and employment of Aboriginal employees; and, strategies for skill enhancement and support for Aboriginal employees. One hundred and eighty three employees, working in metropolitan and rural and remote centres of a large public sector agency participated in the research study. Structured formal interviews with twenty eight participants sought to discover what the workplace was like for the Aboriginal employees, and the perceptions of non Aboriginal employees about their Aboriginal colleagues. Data was also collected through participant observation, work shadowing Aboriginal employees, questionnaires and a survey completed by 136 Aboriginal employees throughout the organisation and 29 non Aboriginal employees. Focus group interviews, telephone interviews and the use of interactive media (including video conferencing) extended data collection. The examination of documents and a review of the literature were also used. Data collected in diverse ways was analysed using the constant comparative method. The basic problem grounded in the data was that Aboriginal employment in the public sector is not comparative with Aboriginal representation in the Australian population, and that barriers to employment and employment opportunities for Aboriginal people exist and flourish