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ABSTRACT This article investigates the effects that perceived challenges and skills in activities have on the quality of everyday life experience. Based on flow theory it was predicted that quality of daily experience would depend on the challenge experienced and skill required in specific situations, as well as on the balance between challenge and skill. The Experience Sampling Method (ESM) was used on a sample of 208 talented adolescents to measure daily variations in four dimensions of experience (concentration, wish to do the activity, involvement, and happiness) in four contexts (in school, with relatives, with friends, and in solitude). The four dimensions of experience were regressed on the predictors challenges, skills, and their absolute difference expressing the balance/imbalance of challenges and skills. Hierarchical linear modeling, explained in detail herein, was conducted on a 1-week sample of experiences. Findings confirm the prediction of flow theory that the balance of challenges and skills has a positive and independent effect on the quality of experience. Yet some differences of parameter estimates were found between dimensions of experience and between social contexts. These heterogeneities call for a further improvement of the flow model.