Background: Individuals with palliative care needs face increased risk of discontinuity of care as they navigate between healthcare settings, locations and practitioners which can result in poor outcomes. Little is known about interactions that occur between specialist and generalist palliative care teams as patients are transition from hospital to community-based care after hospitalisation. Aim: To understand what happens between inpatient specialist palliative care teams and the generalist teams who provide post-discharge palliative care for shared patients. Design: A constructivist grounded theory approach, using semi-structured interviews and constant comparative analysis, including coding, memo-writing and diagram construction. Settings/participants: Interviews ( n = 21) with specialist palliative care clinicians and clinicians in other specialties providing generalist palliative care. Specialists had training in palliative care and worked in specialty palliative care practices; other clinicians worked in primary care or oncology and did not have specialised palliative care training. Results: A grounded theory of interdependence between specialist and generalist palliative care teams across healthcare settings was constructed. Two states of inter-team functioning were found which related to how teams perceived themselves: separate teams or one cross-boundary team. Three conditions influenced these two states of inter-team functioning: knowing the other team; communicating intentionally; and acknowledging and valuing the role of the other team. Conclusions: Teams need to explicitly consider and agree their mode of functioning, and enact changes to enhance knowledge of the team, intentional communication and valuing other teams’ contributions. Future research is needed to test or expand this theory across a range of cultures and contexts.