Often associated with Vygotsky’s socio-cultural theory, collaborative dialogue as a teaching technique has been frequently studied over the past few decades. There has been a great debate among experts and researchers regarding the effectiveness of this technique in facilitating the acquisition of second language skills in different educational contexts. Drawing upon an experimental design, the present study focused on the effect of collaborative dialogue on vocabulary acquisition and retention of EFL learners. Sixty-four Iranian lower intermediate EFL learners were homogenized by Oxford Placement Test, and were randomly divided into two collaborative and individual groups. A number of six tasks were developed and implemented at three stages of pre-task, during-task, and post-task. The learners in the collaborative group performed the tasks in groups of 3-4, while their counterparts in the individual group performed all the tasks individually. The learners’ vocabulary knowledge was assessed using a researcher-made constructed-response vocabulary test in three occasions: pre-test, post-test, and follow-up-test. A set of independentsample t-tests was run to compare the groups’ performance. The results revealed that the collaborative technique had significantly immediate and delayed effects on vocabulary acquisition and retention of the collaborative group. Possible reasons for this over-performance are discussed.