Digital badges have been increasingly used to encourage users to achieve specific goals in learning. Recent studies have shown that badges can be effective to incentivize learners to complete specific tasks or increase learning participation in online learning environments. This study utilized a mixed research method to examine the impact of a badge system on class participation and interaction for both online and face-to-face classes in a graduate program for teacher education. Badges were issued for students who contributed to quality class discussion and peer project comments in courses with two different pedagogical orientations: read-write-reflect-comment and activity-based design. Quantitative data collected from students enrolled in courses with and without a badge system implemented and qualitative data collected from students enrolled only in courses with a badge system implemented were analyzed. The findings indicate that badges are effective in enhancing student interaction but not student participation. Compared with activity-based courses, badges could better enhance student interaction in traditional online courses that utilized read-write-reflect-comment model. Badges showed no significant effect on learner interaction in activity-based courses that were already highly interactive.