This paper presents a model of interpersonal trust dynamics, grounded in a longitudinal case study of an interorganizational information technology development project in New York State¹. System dynamics is the simulation method selected in this theory-building effort, based on qualitative data collected by the Center for Technology in Government. The model integrates concepts from economic models, as well as psychological and sociological theories about trust, learning, and perceptual processes in interpersonal relations. The simulation experiments show plausible path dependent behaviors with the characteristic asymmetries between trust and distrust described both in the literature an in the case data. The role of trust and knowledge development in the success of these projects will be explored by combining models of sub processes into larger models of the overall collaboration. The value of the model as a theory building tool will be enhanced by extended data collection and combining with related process models.