In the last years the program of teacher education at Iceland University of Education has been revised and a new program for practice teaching started in the autumn 2007. Two main objec-tives of the new programs are: a) to encourage integration of practical experience and theoreti-cal understanding in student learning, b) to develop partnership between IUE and primary and secondary schools, based on shared responsibility for teacher education. The purpose of the study presented in the paper is to seek understanding of how the new pro-gram for practice teaching contributes to the professional competence needed by new teachers. It is assumed that not only the teacher students will be learning through the practice periods; the other participants in the partnerships and the social context of the learning will develop as well. These processes will be examined as well as the interaction between them. In the first part of the study the participants are supervisors in one “home school”, a group of teacher students, and teachers in Iceland University of Education; the focus will be on their definitions of teacher competence, and of their role in the learning processes. Interviews, port-folios and observation are used for data collection. The theoretical background draws on concepts from social-cultural psychology and activity theory.