Background: Staff working on acute inpatient mental health wards face unique challenges in terms of short admissions, acuity, complexity and exposure to violence, suicide and self-harm. They experience high levels of stress and burnout, which can impact compassion. Aim: To qualitatively explore staff’s understanding and conceptualisation of the development, loss and restoration of compassion within acute inpatient environments. Method: Eleven participants from a variety of professional backgrounds currently working on acute wards were interviewed. Using constructivist grounded theory, data were synthesised into theoretical categories and sub-categories. Results: A conceptual model of the facilitators and inhibitors of compassionate care was developed, based on five categories that emerged from the data: A compassionate stance; the challenges of acute wards; feeling under threat; restoring compassion; and a compassionate organisation. Conclusions: Findings outline the process whereby staff compassion can be challenged or depleted, leading to a negative appraisal of the patient. Colleague support, knowing and understanding patients, and accessing a reflective space all supported the restoration of compassion. Staff reported lack of organisational compassion influenced their ability to maintain a compassionate stance. The importance of appropriate training and support structures is discussed, alongside recommendations to support the development of compassionate acute mental health care.