We study the dynamics of diffusing particles in one space dimension with annihilation on collision and nucleation (creation of particles) with constant probability per unit time and length. The cases of nucleation of single particles and nucleation in pairs are considered. A new method of analysis permits exact calculation of the steady-state density and its time evolution in terms of the three parameters describing the microscopic dynamics: the nucleation rate, the initial separation of nucleated pairs, and the diffusivity of a particle. For paired nucleation at sufficiently small initial separation the nucleation rate is proportional to the square of the steady-state density. For unpaired nucleation, and for paired nucleation at sufficiently large initial separation, the nucleation rate is proportional to the cube of the steady-state density.