A semester-long ethnography study was carried out to investigate project-based learning in a graduate software engineering course through the implementation of an Open-Source Software Development (OSSD) learning environment, which featured authentic projects, learning community, cognitive apprenticeship, and technology affordances. The study revealed that while the OSSD learning environment motivated students to engage in real-world projects, tensions were found between the students' self-processes, such as their perceptions, expectations, beliefs, goals, and values, and the innovative learning environment. Most importantly, this study demonstrated key interplays between project authenticity and learner characteristics, which resulted in different identity representations and different perceptions among students, which in turn affected students' goal orientations, motivation to work on projects, commitment to team collaboration, attitudes toward expert coaching and feedback, and the use of collaborative technologies.