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Following calls for greater theory development in software engineering, this paper formulates a process theory of software development practice. Sensemaking-Coevolution-Implementation Theory explains how complex software systems are created by cohesive software development teams in organizations. It posits that an independent agent (the development team) creates a software system by alternating between three categories of activities: making sense of an ambiguous context, mutually refining schemas of the context and design space, and manifesting their understanding of the design space in a technological artifact. This theory development paper defines, illustrates and conceptually evaluates Sensemaking-Coevolution-Implementation Theory. It grounds the theory's concepts and relationships in existing software engineering, information systems development and interdisciplinary design literature.