This article reports a theory-driven experimental study that evaluates the effects of an annotation functionality on online social interaction and individual learning outcomes. The central hypothesis of this study is that directly addressing a part of a text by annotating it and then connecting each annotation with its related discussion can decrease coordinative interaction costs and result in a higher-quality discussion that favors greater gains in individual learning outcomes. To reach our objective, we carried out a theory-driven experimental study that compares two versions of an anchored discussion system: one with annotation functionality and one without it, both displaying the learning material side by side with its associated discussion in one window. Participants were 106 students enrolled in two sections of a blended-format course in health education. We assigned each section to a software condition. The examination of students' online social interaction centered on a fine-grained content analysis of coordination and knowledge construction activities as well as sequential analysis of knowledge construction activities. The results indicate that annotation functionality decreased coordinative interaction costs and stimulated more elaborated discussions that favored greater gains in individual learning outcomes. Implications for research and practice are discussed.