Objective: To address a gap in understanding of verbal exchange (oral and aural) health literacy by describing the systematic development of a verbal exchange health literacy (VEHL) definition and model which hypothesizes the role of VEHL in health outcomes. Methods: Current health literacy and communication literature was systematically reviewed and combined with qualitative patient and provider data that were analyzed using a grounded theory approach. Results: Analyses of current literature and formative data indicated the importance of verbal exchange in the clinical setting and revealed various factors associated with the patient-provider relationship and their characteristics that influence decision making and health behaviors. VEHL is defined as the ability to speak and listen that facilitates exchanging, understanding, and interpreting of health information for health-decision making, disease management and navigation of the healthcare system. A model depiction of mediating and influenced factors is presented. Conclusion: A definition and model of VEHL is a step toward addressing a gap in health literacy knowledge and provides a foundation for examining the influence of VEHL on health outcomes. Practice implications: VEHL is an extension of current descriptions of health literacy and has implications for patient-provider communication and health decision making. © 2013 Elsevier Ireland Ltd.