This study attempted to investigate the characteristics of interaction dynamics in a group oral interaction carried out by Japanese learners of English. The relationship between the participants' language development and interactional management functions (IMFs) was also explored. Oral performance tests in a paired or a small group have recently been introduced because the assessment of L2 learners' authentic conversational competence is considered important in the current era of globalization. Qualitative analysis showed that some characteristics, namely, modifying or developing the topic and negotiation of meaning, displayed an association with the development of the participants' language ability. More proficient speakers' dialogues of this study showed a more complex, co-constructed, and collaborative nature, with more interactions and negotiation of meaning. (Contains 3 figures.)