Learning games and game-based learning have been taken into use in various fields of education. Even though the use of learning games has been widely studied, not enough is known about how to pedagogically design game development projects as learning environments. In our paper we explore the design and development process of a mobile learning game as a collaborative and pedagogically grounded learning environment. Our research question is: What kind of pedagogical model is needed to support collaborative game design and development process? The goal of our research was twofold: 1) to develop and experiment with a pedagogical model based on collaborative game development, and 2) to develop and test the learning game itself, targeted for learning international business and trade. We applied the design-based research method according to which the pedagogical model was simultaneously developed and tested in practice. In our case study we describe the iterative development of the learning environment and the learning game itself. We will introduce our analytical framework that combines theories and concepts from pedagogy and education sciences. We conceptualize the pedagogical model and learning process as a collaborative co-creation of knowledge within an innovative knowledge-community (trialogical learning). Our findings describe how the pedagogically grounded learning environment can support collaborative, boundary-crossing learning. The findings highlight the potential of game design and development projects as specific learning environments supporting intensive interaction and knowledge co-creation in higher education. As our main result we present the P3P pedagogical model that guides the teachers when creating learning projects around game development. Our findings will be of interest for researchers, practitioners, and teachers in the field of learning games and pedagogy.