Despite the growing attention towards gamification in learning context, challenge-based gamification application has rarely been subjected to testing in education. In recognition of this void, and grounded on gamification principles, we developed Educhall web-based program. Drawing on self-determination theory, and flow theory the present study aims to explore how the application of this challenge-based gamified program in to learning process of students can increase students' motivation, flow, and academic success through the generated competition and challenge. The study applied a random experimental research design within distance learning context with 30 university students of control group and 30 students of experimental group who used the Educhall application for one academic semester. In line with self-determination theory, it was statistically evidenced that application of challenge-based gamified learning method increased level of academic performance and overall motivation. Of the motivational sub factors, experimental group reported significantly higher confidence level and satisfaction towards the course. Furthermore, grounded on flow theory, the study showed that challenge-based gamified learning increased flow level of learners but not significantly which warrants further data collection and experimental research in future studies. Implications for research and practice are discussed.