This article uses interactional sociolinguistic methodology to examine humor as both content and process in the classroom. It contributes to our increasing understanding not only of the ways that humor is perceived and constructed in intercultural discourse, but also the ways that it may have pedagogical benefits of increasing L2 pragmatic and interactional competence. The topic of humor in the classroom is typically treated either in relation to the teacher’s behavior, or in relation to course content. The former focuses on strategies for the use of humor in the service of effective classroom control and relationships with students (e.g., Loomans 1993; Shade 1996), with the assumption that more effective learning can take place in the atmosphere created. The latter focuses on the use of humor genres as the basis for language exercises (Megdyes 2002), but with little analysis of the nature of the humor. Within the field of second language learning and teaching, there has been a recent interest in humor as subsumed under the general rubric of language play (Cook 2000; Bushnell 2008; Evaldsson and Cekaite 2010; Jaspers 2011; Waring 2013), with a focus on the cognitive and the pedagogical possibilities at all levels of language (phonological, morphosyntactic, semantic, and pragmatic). In addition, there is a growing body of literature that focuses on student-initiated joking in L2 classrooms, some of which explicitly uses humor as the construct (Garland 2010; Pomerantz and Bell 2011; Matsumoto 2014; Moalla 2014), as well as literature that is concerned with the ways in which joking interaction intersects with learning processes (Tocalli-Beller and Swain 2007; Waring 2011; Bell 2012; Kim 2014). A key idea that has emerged is the importance of student agency. This article uses an example of joking that was brought to the classroom by a student as part of an ethnographic pedagogy, and it analyses students’ use of joking within a discussion of the critical incident facilitated by the teacher. It is a multi-layered analysis of the use of a critical incident involving cross-cultural joking as part of course content, presenting a discourse analysis of a key class discussion in an adult class on cross-cultural interaction in which student joking interaction coincided with an insight point.