Higher student enrolment at North American tertiary institutions over the last decade has led to a greater reliance on lecturing in large classes (i.e., 50 students or more). The efficiency of lecturing as a method of instruction can sometimes come at the cost of student interaction, engagement, critical thinking and satisfaction. Implementing discussion groups in large lecture classes is one technique that can reverse these costs, however it is not clear what it is about discussion groups that promotes these outcomes. Drawing on social identity theory (Tajfel, 1981), the present study examined the roles of two discussion group characteristics: identification and effectiveness, in predicting course interest and engagement, critical thinking and application, and course satisfaction among psychology students assigned to discussion groups in a large class (N = 81) over a 12-week period. Findings indicated that discussion group effectiveness, but not discussion group identification, predicted course interest and engagement, critical thinking and application, and course satisfaction. Importantly, the relationships between discussion group effectiveness and critical thinking and application, and discussion group effectiveness and course satisfaction were mediated by course interest and engagement. When discussion groups help students to understand and engage with new ideas and information, this can promote the interest and engagement that can promote positive outcomes. The implications of these findings are discussed.