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Purpose: To explore patients' and parents' involvement in the formative assessment of undergraduate nursing students' paediatric clinical practice. Methods: We conducted semi‐structured interviews with paediatric patients between 14 to 18 years old and parents who received care from a nursing student while admitted to a paediatric tertiary care hospital in Canada. We analysed the data using qualitative content analysis as well as Lincoln and Guba's criteria for establishing trustworthiness. The Consolidated criteria for reporting qualitative studies (COREQ) checklist was completed for the quality appraisal of this article. Findings: Three categories emerged from the data: 1) how patients and parents are currently involved in the formative assessment of nursing students' paediatric clinical practice; 2) how patients and parents would prefer to be involved in the formative assessment of nursing students' paediatric clinical practice; and 3) the potential benefits and challenges of involving patients and parents in the formative assessment of nursing students' paediatric clinical practice. Conclusion: This study provided an understanding of patients' and parents' past encounters with nursing students and the elements of care that they have assessed as well as those that they would prefer to assess and provide feedback on, while considering the potential benefits and challenges of their involvement. The findings of this study will assist clinical instructors in determining how and when to involve patients and parents in the assessment of nursing students. Academic institutions offering nursing programmes should consider the study findings when improving or changing formative assessment strategies. [ABSTRACT FROM AUTHOR]