A methodology for observing and analyzing group design activity is presented. This methodology is based on ethnographic and interaction analysis methods from the social sciences. Using it to study collaborative design activity leads to a descriptive analysis that identifies what resources the designers use and what obstacles they must overcome to accomplish their work. Based on this analysis, a better understanding of the needs of designers can be used to guide the design of tools to support group design activity. For example, this analysis led to an understanding of the role of hand gestures in collaborative design activity. Gestures are used to help demonstrate actions and establish shared reference. Hand gestures are often conducted in relation to sketches and other objects in the shared workspace. Descriptions of how to record group activity on videotape, represent and analyze the data (using a hypertext system), and abstract general observations from the data are presented.