This paper will report on a study conducted in the western region of New South Wales during the early part of 2009. It was concentrated in both primary and secondary schools around the regional city of Dubbo, about 350 kilometres northwest of Sydney. The study is based on an adaptive expertise view of teachers' professional knowledge and skill. Self-directed, focused problem solving and reflection in the context of everyday practice enables teachers, like other professionals, to learn and develop expertise. However, only a relatively small percentage of teachers engage in such practices systematically and continuously. This can in part be explained by the fact that teachers' work is still mostly conducted individually and that the organisational culture of a school is often not conducive to teachers' individual growth and practice innovations. This is a particular disadvantage in rural areas, such as in many parts of Australia where teachers find themselves often hundreds of kilometres away from the next large school. Employing a teacher-led design approach, we used a combination of workshops and on-line, mainly wiki-based collaboration to engage teams of teachers into a 6-week innovation activity. They were challenged with the task to innovate their ICT use-teachers have been more or less routinely using Interactive Digital Whiteboards and e-learning content-by integrating new elements of immersive learning (such as Second Life) into their teaching practices. Our main research questions were: How is TLF and other digital content being utilized by teams of teachers who design for learning experiences in immersive environments? What is the nature of teachers' pedagogical innovations and what is the nature of their innovation processes? How can teachers' distributed work and knowledge sharing be effectively supported, including using online collaboration environments (web-conferencing and wiki-based document management)? How do teachers interpret and utilize (on-line) resources that inform about the nature of educational innovation processes and about research on learning in immersive environments? We were particularly interested in the question of how teachers extend their current practices rather than acquire (by means of "training") completely new ones. This because teachers have had access to The Le@rning Federation's (TLF) digital learning resources, available to all Australian and New Zealand schools. The TLF project is a collaborative initiative of all Australian and New Zealand governments. Since 2001 high-quality, innovative content has seeded and supported schools' moves into 21st-century education, and is an integral part of Australia's digital education revolution, the national strategy. Teams of teachers were encouraged to design and/or adapt an 'immersive learning experience' for their students, for instance design for learning that takes place in an easily accessible world such as 2nd Life or Wonderland. We used a mixed-method approach, collecting on-line performance as well as survey and interview data. Our observations on the teams' work and learning will be summarised, along with a range of enablers and obstacles that were identified as the teachers tried to come to terms with immersive environments and web-based collaboration.