ABSTRACT Existing approaches to teaching `culture' in the realm of Distance foreign language (FL) instruction and gaps within; under-researched Computer Assisted Language Learning (CALL) tool of webquests; and Mediation in Sociocultural Theory (SCT) have all led to the following case study. This study was guided by the constructs of `culture' in FL instruction, Sociocultural Theory, and literature in CALL and Computer-Mediated Communication (CMC). This study examines how CMC-embedded webquests (asynchronous and synchronous CMC components built into webquests) developed online students' knowledge and understanding of German culture. Additionally, this study examines what mediating strategies (Lidz, 2002) were used by the online students of German in their asynchronous and synchronous online discussions of German culture, that were part of their CMC-embedded webquests' tasks. A web-based survey was administered to all students in an online German II course to elicit information about each student's past travels to Germany or other German-speaking countries and comfort level with various technologies. Based on their participation levels and the information elicited from this web-based survey, the online class was divided into groups of four, such that maximum variation was achieved in each group. Five such groups were formed with four students in each group. Two content-based CMC-embedded webquests were developed and created for this purpose and were administered over a period of four weeks, with two weeks for each content based CMC-embedded webquest. The first CMC-embedded webquest revolved around `Our Environment' or Umwelt, and the second was called `Germany, before and after the wall.' For each CMC-embedded webquests, the tasks included pre- and post CMC-embedded webquest essays, participation in discussion forums over a period of one week, and online chats. The guiding questions developed for each CMC component were separate. Based on the word count generated by each group, two groups (one with less than optimal and one with more than optimal levels of interaction) were chosen iteratively. In other words, pre- and post essays written by these eight participants, transcripts of asynchronous and synchronous online discussions with respective group members, transcripts of their online interviews, and field notes journal became the data sources for this multiple embedded qualitative case study (Yin, 2003). Findings emerging from a constant comparison method analysis indicate that the CMC-embedded webquests played a significant role in advancing the online students' knowledge and understanding of German culture. Apart from the cognitive benefits of this dynamic CALL tool, affective benefits included that students appreciated and enjoyed learning about the target culture in way that they retained the information even two months after they were completed, and particularly found the web resources useful and videos engaging. More importantly, since all participants were distant learners of German, they valued the opportunities provided by the two CMC-embedded webquests to interact with their respective group members in asynchronous and synchronous modes of communication. Results of collapsing all asynchronous and synchronous `e-turns' into Lidz' (2002) mediating strategies indicate that mediating strategies of `Sharing of Experiences,' `Affective Involvement,' and `Joint Regard' were higher for synchronous `e-turns.' This confirms that synchronous online discussions evoke a higher `sense of community' and `groups', `sense of purpose' for online learners (Carabajal, LaPointe, and Gunawardena, 2007). On the other hand, higher frequencies of `Praise/ Encouragement,' `Task Regulation,' and `Challenge,' in asynchronous `e-turns' demonstrates that distance learners are able to produce more cohesive and detailed responses in asynchronous online discussions. These results highlight the dynamic nature and potentiality of CMC-embedded webquests that can be especially useful to teach culture, an often neglected aspect of FL instruction, and the importance of creating groups and peer interaction in distance FL instruction. Additionally, findings of this study have implications on the purpose of the synchronous and asynchronous online discussions, culture model in FL instruction and design of CMC-embedded webquests.