With the introduction of smart grid technology, the electricity market paradigm is transformed into consumers-oriented from suppliers-oriented. Thus, a study on diffusion of smart grid in perspective of users is necessary. This research examines factors affecting the adoption and diffusion of smart grid technology from user’s perspective and provides strategic guidelines of diffusing smart grids. Researchers conducted in-depth interviews with 41 people who have been already using smart grid in the Jeju test-bed of South Korea. According to KSGI (2013), Jeju smart grid test-bed is the world’s largest smart grid community that allows the testing of the most advanced smart grid technologies and R&D results, as well as the development of business models. Semi-structured in-depth interviews were used to collect data. Data were analyzed by applying procedures of grounded theory. 19 categories that are represented as factors of diffusing smart grids were identified through open coding. A paradigm model for diffusing smart grid and total of seven propositions as strategic guidelines for government and providers were proposed with implications. The findings contribute to formulating policies for successful diffusion of smart grids at the early stage.