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Interprofessional education (IPE) is embedded in many health professional training programs, often with a focus on collaborative teamwork. Most studies into whether IPE delivers the desired collaborative teamwork capabilities has tended to rely on short term, self-assessed changes in learners’ attitudes, knowledge and skills. This study adopted overt ethnographic observation to understand how a convenience sample of students behave in groups during interprofessional team-based clinical placements. Interprofessional student teams were observed by two independent observers on eight occasions (a total of 720 hours) across three sites. Thematic analysis of the observational data indicates that student teams fell into two categories: higher and lower functioning. Higher functioning teams were observed using humor to build rapport, reduce tension and express humility, and evidenced a greater emphasis on shared client goals. In contrast, lower functioning teams were more formal, with no evidence of humor and less interaction. The higher functioning teams, therefore, not only demonstrated greater interprofessional collaboration they also appeared to have higher levels of psychological safety. Participants in the higher functioning teams also demonstrated mutual trust and confidence and took more risks, often speaking up to provide suggestions, share knowledge and skills, and seek or offer feedback. The results suggest that further explicit training in, and assessment of, psychological safety in IPE needs to be undertaken.