In spite of the growing interest in digital storytelling (DST) in the English as a foreign language (EFL) context, there is a lacuna in research on the role it plays in learning vocabulary. This sequential explanatory mixed-methods study explored the potential of collaborative learner-generated digital stories (DSs) for vocabulary knowledge development and students’ attitudes towards DST-based vocabulary learning experiences. The primary data sources included pre/post-treatment vocabulary tests, collective reflection journals, weblog comments, and interviews. Two experimental groups of undergraduate EFL students were engaged in collaborative DST projects and their vocabulary test scores were compared with those of students in two control groups. The quantitative data were analyzed using independent and paired samples t-tests. Constant comparative method was employed to analyze the qualitative data. As the results showed, the students that were involved in learning the new words through collaborative DSs in the experimental groups outperformed the students in the control groups. The findings further demonstrated that DST empowers the students to integrate vocabulary learning into immediate daily contexts, experience peer-promoted vocabulary learning, contextualize vocabulary in multimodal stories, personalize the vocabulary knowledge development process, and enhance cognitive-affective engagement with stories to learn new words. The students also stated that DST is not a stand-alone pedagogical approach and recommended using animated, game-based, immersive, synchronous, social media-based, and micro DSs to facilitate vocabulary learning. The study promises implications for technology-assisted vocabulary instruction.