Purpose: The present study explores the development of agri-food value chains from an organizational learning perspective, using the German organic food sector as an example. We illustrate how the development of local value chains unfolds over time and outline how facilitation can support this process. Design/methodology/approach: The study used an action research design to facilitate change in practice and to create new knowledge. Data were collected through qualitative interviews, participant observation, and documentation of workshops and other learning activities. Data analysis and conceptualization followed a grounded theory approach. Findings: The development process of value chains occurs in three phases, from joint exploration of the problem, through a phase of experimentation and implementation, to further cultivation of established collaborations among value chain actors. The development process oscillates between intra- and inter-organizational learning as well as explorative and exploitative activities. Practical implications: The results of this study can help to understand and to further professionalize the practice of value chain development and provide guidance for facilitators and other stakeholder working in this field. Theoretical implications: By drawing on the theory of exploration and exploitation, the study enhances the understanding of value chains collaboration in an inter-organizational setting. The study conceptualizes the development of agri-food value chains and the role of facilitators in the process. Originality/value: There is little research to date that considers the development of value chains as a collaborative learning process. The presented grounded theory of local value chain development may inform further research on the transition towards a more sustainable agri-food system.