How best to involve the public in local health policy development and decision-making is an ongoing challenge for health systems. In the current literature on this topic, there is discussion of the lack of rigorous evaluations upon which to draw generalizable conclusions about what public participation methods work best and for what kinds of outcomes. We believe that for evaluation research on public participation to build generalizable claims, some consistency in theoretical framework is needed. A major objective of the research reported on here was to develop such a theoretical framework for understanding public participation in the context of regionalized health governance. The overall research design followed the grounded theory tradition, and included five case studies of public participation initiatives in an urban regional health authority in Canada, as well as a postal survey of community organizations. This particular article describes the theoretical framework developed, with an emphasis on explaining the following major components of the framework: public participation initiatives as a process; policy making processes with a health region; social context as symbolic and political institutions; policy communities; and health of the population as the ultimate outcome of public participation. We believe that this framework is a good beginning to making more explicit the factors that may be considered when evaluating both the processes and outcomes of public participation in health policy development.