Augmented reality (AR) has the potential to create compelling learning experiences. However, there are few research works exploring the design and evaluation of AR for educational settings. In our research, we treat AR as a type of multimedia that is situated in authentic environments and apply multimedia learning theory as a framework for developing our educational applications. We share our experiences in developing a handheld AR system and one specific use case, namely, situated vocabulary learning. Results of our evaluations show that we are able to create AR applications with good system usability. More importantly, our preliminary evaluations show that AR may lead to better retention of words and improve student attention and satisfaction.