It means when people are thinking too narrowly. E.g. if you ask a general in the army how to solve a problem, he might say, "we can use the army to fight them". He will not be thinking about other solutions, because he is very narrow-minded in his approach. A hammer is a tool which is used only for nails. So someone who only has a hammer thinks of everything like a nail, because he is thinking it's all he has that he can use. When all you have is a hammer ,everything looks like a nail = you look at every problem like it is a nail, because all you have is a hammer, so you're only thinking about using a hammer - when in fact there are other solutions he should think of. For example, for a screw, you must use a screwdriver. But if that man only owns a hammer, he will think of it like a nail. But it's wrong. get it?

If I was a hammer i'd nail everything in sight :P

i wish it would be true! anyway....the expression means that some look at things not as things are or may be but as how some are able/want to perceive them. The last paragraf of iangreen it is quite funny for me, and if i translate literally into my language is funnier by far. ( just talking about of underground meanings....so, i ll paraphrase this famous saying from Deng or so...."screwdriver or hammer is not important, the important thing is that it hits the screw/nail".......sorry lady, you can call me as many names as you may feel like)

When all you have is a hammer, everything looks like a nail. If all you have is a hammer, everything looks like a nail. Both are grammatically correct. It means that if you only have one way to do things (if you only had a hammer to use... ....then you might think all problems should have the same one solution (using your one tool, your hammer). This describes a person who doesn't have many ways to fix or cope with stress. He just has one way. Because it is a "hammer", his way is generally too forceful and strong for the situations. So this person always chooses (their hammer) to deal with problems or stress even if he situation needs a different kind of solution. The advice learned from this is to understand that different problems or challenges require (need) different solutions. The smart person has many different tools (in life) and uses what is needed to solve diffferent problems - as needed ~~~~~ not just one way - not just one solution. Having one solution to everything is not a good choice. I hope I explained this well.

http://en.wiktionary.org/wiki/if_all_you_have_is_a_hammer,_everything_looks_like_a_nail