This paper reports on an innovative, computer-mediated, educational technology application in a simulated distance learning environment. As an initial evaluation, real student groups completed an entire university course using this state-of-the-art, two-way synchronous audio/visual communication technology, Distributed Tutored Video Instruction (DTVI). The study reported here explored student perceptions of a simulated distance learning environment using the system. The learning environment was characterized by videotaped lectures by the course instructor, delivered in computer-mediated small group settings. Six separate groups made up of six to eight students and a facilitator were studied. Group members were in separate locations, interacting via synchronous audio and visual computer channels. Our findings indicate an overall high level of perceived effectiveness and satisfaction with the instructional mode. In addition, significant relationships were established between facilitator effectiveness and student satisfaction, student motivation and class participation, student exam grades and perceived amount of group discussion. Findings indicate innovations in computer-mediated instructional designs can achieve desired levels of participant interaction considered critical to effective distance education technology.