A brief history of the author's long contact with Isabel Menzies Lyth leads into a description of the latter's professional training and development and her work with colleagues at the Tavistock Clinic with whom she had first worked during the Second World War when applied social psychology was first developing. The influences of Malinowski and Kurt Lewin are discussed. Then follows a detailed description of Isabel Menzies Lyth's consultation to a day nursery project carried out by Alastair Bain and the author. This spells out how the values and concepts of Isabel Menzies Lyth were applied in this Action Research. The nature of the primary task; the need for a clear organizational structure and roles; a defensive organizational system resulting from anxiety; the need for personal autonomy and individual responsibility; the importance of close attachments between staff and children; reflective practice; management of anxiety and dissemination of findings.