Literature on information systems (IS) method design provides little guidance for constructing and validating IS related methods based on components of existing methods. Method engineering, including method characteristics framework and super method, is a methodology for constructing holistic new methods from existing ones, based on the elicitation and adaptation of components from the existing methods. However, while these methodologies focus on how to conceptualize, develop, adapt, and assemble new methods from existing method components, we believe that the newly formed methods need to be rigorously grounded in the field and hence should be iteratively developed and inductively validated based on empirical data. This paper proposes combining several grounded theory tools with methodologies of constructing new methods, for forming a comprehensive methodology for IS method design, so the methods created with it will be grounded. The new methodology is illustrated by designing a requirements engineering method for knowledge management systems.