Project-based learning engages students in problem solving through artefact design. However, previous studies of online project-based learning have focused primarily on the dynamics of online collaboration; students' knowledge construction throughout this process has not been examined thoroughly. This case study analyzed the relationship between students' levels of knowledge construction during asynchronous online discussions with respect to engagement in project-based learning. Graduate students' online postings in a course that comprised both project-based and non-project learning activities were coded and counted for knowledge construction, teaching, and social interaction moves using computer-mediated discourse analysis. Chi-square analyses found that the instructor's teaching discourse remained fairly consistent during project-based and non-project learning. Despite this, students' online discussions during project-based learning were characterized by more advanced levels of knowledge construction, where ideas were rationalized and integrated into plausible solutions. In contrast, students' online postings outside project-based learning rarely moved beyond the lower levels of information sharing and idea exploration. Based on these results, guidelines for designing and facilitating online project-based learning are presented and discussed. (Contains 4 tables.)