This study reports an analysis of how pre-service teachers (n=34) made sense of fraction division with remainders using pictorial modeling strategies, and how small-group and whole-class discussion helped them develop conceptual understanding. One and a half class sessions were video recorded, and 12 interviews were conducted. Results indicate that pre-service teachers can develop a conceptual understanding of fraction division with remainders using modeling strategies, and their understanding emerges in three levels: a) level one: ignoring the remainder or labeling it incorrectly; b) level two: interpreting the remainder in the original unit but not relating it to the new unit; and c) level three: interpreting the remainder both in the original unit and the new unit flexibly.