This paper presents an overview of the theory of situated cognition by providing its origin, a listing of its main principles and then discussing in detail the principles of, authentic learning environments, legitimate peripheral participation, and assessment. It also provides two examples of the application of situated cognition principles. The first is of communities of practice as an instructional strategy and the way in which it has been applied in the INSITE and I-Learn projects. The second example is of a situated learning and how the Cognition and Technology Group at Vanderbilt University, CGTV-Jasper Woodbury series has successfully applied the principles of situated learning in its instructional design methodology. The paper concludes that the theory of situated cognition, in its most general form, has the power to inform instructional designers on several levels both descriptively and prescriptively, in the classroom and in the workforce. Includes one table. (Contains 12 references.) (AEF)