Project work training is a recent teaching approach which focuses on students’ learning by actively engaging them in real-world meaningful projects in the field of language education. The present study investigates the impact of culturally-oriented project work training on the social identity of Iranian EFL learners, integrating the interplay of language learning and identity development. Employing a mixed-methods approach, the research combines quantitative pretests and post-tests with qualitative interviews and observations to explore the effects of project-based learning on five dimensions of social identity: social competence, social solidarity, cultural competence, literacy, and extraversion. Forty intermediate-level EFL learners from a language institute in Tehran were conveniently selected and divided into experimental and control groups, with the former engaging in culturally-relevant, collaborative project activities designed to foster real-world language use and social interaction, and the latter receiving the instruction based on the institute’s educational and curriculum policy. The findings revealed significant improvements in the experimental group on the three out of five factors of social identity i.e., Social solidarity: F(1, 33) = 5.54, p = .02, Literacy: F(1, 33) = 16.81, p = .000, and cultural competence: F(1, 33) = 9.18, p = .006between the students in the experimental group. Qualitative insights underscore learners' positive perceptions of project work, highlighting enhanced motivation, cultural awareness, and collaborative skills. However, some challenges and drawbacks associated with project-work educational approach such as conflicts of ideas and interests, insufficient teacher guidance, uneven workload in groups, and language barriers were identified by the interviewees.