As a social institution, nursing has a responsibility to society for the development of knowledge in the areas described by nursing diagnoses. This article focuses on the need for developing the theoretical basis of each diagnostic category. Diagnoses are viewed as summarizations of underlying conceptual models for interpreting observations, and as such, they provide a perspective for understanding and thinking about a set of clinical observations. At present many diagnostic concepts do not meet this standard and suggest primitive, pretheoretical ideas with a minimal knowledge base. The importance of having valid and reliable diagnostic categories for use in making clinical judgments and as a focus for care planning is discussed. A cycle of development is outlined in three phases: diagnostic concept identification, concept analysis‐model development, and construction/reconstruction of diagnostic categories. It is suggested that a useful category captures the conceptual understanding and state of knowledge development about a phenomena in its (a) name, (b) definition, and (c) cluster of defining characteristic