This thesis argues that to better understand student learning in undergraduate education, it is useful to focus not only on how students are affected by the context of learning but also how they act on the context to achieve their own valued outcomes. The thesis specifically explored the question of ‘how do students regulate their learning in relation to the contextual demands and their own valued outcomes?’ This longitudinal qualitative study has focused on a group of undergraduates following a four year degree course in Psychology in a Sri Lankan university. I have used an analytical framework informed by Engeström’s version of Cultural Historical Activity Theory (CHAT) for data analysis. Accordingly, I have conceptualised student learning in the undergraduate course as a network of activity systems that weaves together people and cultural tools to transform the collective purpose of learning. It emerged in the analysis of the activity system that students’ learning is affected mainly by tensions or dilemmas arising from the collective purpose and the institutional assessment practices. The collaborative attempt to change the purpose and the context of learning by students’ and their lecturers has mutually transformed both the collective purpose (object) and the students’ identities and increased their action possibilities. This dialectical process is mediated by the cultural tools which included curriculum, teaching and assessment as well as social relationships. In the analysis of individual differences in achieving expansive learning there emerged five interacting factors which included; a student’s past history of education; goal setting; motivation for transforming identity; mobilising resources and views on the object and tools used on the course. These factors do not operate in isolation and they interact within an individual’s socio-cultural context of learning, which simultaneously operates with the collaborative activity of student learning in the undergraduate course. The above findings are synthesised into a model for understanding student learning in undergraduate education and the implications for policy, practice and further research are presented at the end of the thesis. The thesis also addresses the issue of striking a balance between enhancing employability skills and providing a broad higher education based on liberal values. This arises directly from my research and is a part of current academic debates within higher education. It is argued that conceptualising student learning in undergraduate education as a dialectical change process of identity transformation of students, which is mediated by social relationships and cultural tools, may be helpful in resolving this issue. The thesis also suggests ways to conceptualise student learning in undergraduate courses, as a network of activity systems, which weaves together people and cultural tools to transform the collective purpose of learning. Such an approach can transform students’ identities and increase their possibilities for actions in intellectual, cultural, economic, social and moral spheres of life.