Although preliminary research implies a tantalizing association between workplace gossip and interpersonal relationships, little is known about how gossip shapes relationships at work. Given that relationships are integral to employee wellbeing and to the development of social capital, it appears vital to develop a more comprehensive understanding of the psychological processes linking gossip and workplace relationships. To this end, we induce theory from qualitative evidence regarding the processes whereby workplace gossip shapes relationships in the workplace. Taking the under-researched perspective of the gossip recipient, our study draws on multi-source data to explore how recipients’ experiences of gossip incidents affect their dyadic relationships with gossipers and gossip targets. We find that recipients’ interpretations of gossipers’ intentions—prosocial, self-serving, or genuine—initiate three distinct processes that engender a range of relational outcomes, from decreased trust to the development of close interpersonal connections. In describing these nuanced processes and their associated relational outcomes, we provide insights that extend and enrich theory and challenge conventional assumptions about workplace gossip.