This article reports on a detailed empirical study of the way narrative task design influences the oral performance of second-language (L2) learners. Building on previous research findings, two dimensions of narrative design were chosen for investigation: narrative complexity and inherent narrative structure. Narrative complexity refers to the presence of simultaneous storylines; in this case, we compared single-story narratives with dual-story narratives. Inherent narrative structure refers to the order of events in a narrative; we compared narratives where this was fixed to others where the events could be reordered without loss of coherence. Additionally, we explored the influence of learning context on performance by gathering data from two comparable groups of participants: 60 learners in a foreign language context in Teheran and 40 in an L2 context in London. All participants recounted two of four narratives from cartoon pictures prompts, giving a between-subjects design for narrative complexity and a within-subjects design for inherent narrative structure. The results show clearly that for both groups, L2 performance was affected by the design of the task: Syntactic complexity was supported by narrative storyline complexity and grammatical accuracy was supported by an inherently fixed narrative structure. We reason that the task of recounting simultaneous events leads learners into attempting more hypotactic language, such as subordinate clauses that follow, for example, while, although, at the same time as, etc. We reason also that a tight narrative structure allows learners to achieve greater accuracy in the L2 (within minutes of performing less accurately on a loosely structured narrative) because the tight ordering of events releases attentional resources that would otherwise be spent on finding connections between the pictures. The learning context was shown to have no effect on either accuracy or fluency but an unexpectedly clear effect on syntactic complexity and lexical diversity. The learners in London seem to have benefited from being in the target language environment by developing not more accurate grammar but a more diverse resource of English words and syntactic choices. In a companion article (Foster & Tavakoli, 2009) we compared their performance with native-speaker baseline data and see that, in terms of nativelike selection of vocabulary and phrasing, the learners in London are closing in on native-speaker norms. The study provides empirical evidence that L2 performance is affected by task design in predictable ways. It also shows that living within the target language environment, and presumably using the L2 in a host of everyday tasks outside the classroom, confers a distinct lexical advantage, not a grammatical one.