Due to limited budgets and manpower, most elementary schools in Taiwan do not plan or provide library instruction for students. Although students can use libraries, they typically lack the knowledge needed to use library resources effectively. Consequently, students have difficulty finding the books they need and can easily become overwhelmed by the massive amount of information in libraries. Computer-assisted instruction for teaching basic library skills to large numbers of students is an appealing method. Particularly, developing augmented reality (AR) technologies for learning have garnered considerable attention in education research. Many researchers and scholars believe that integrating teaching and AR enhances student learning performance and motivation. This work develops an educational AR system based on situated learning theory, and applies innovative augmented reality interactive technology to a library’s learning environment. Student library knowledge can be enhanced via the proposed augmented reality library instruction system (ARLIS). Experimental results demonstrate that student learning performance is improved significantly by using the proposed ARLIS. Moreover, this work demonstrates that using the proposed ARLIS for library instruction results in the same learning performance as conventional librarian instruction and there is no gender difference on learning performance between the proposed ARLIS and conventional librarian instruction. Moreover, the proposed library instruction system overcomes shortcomings of personal teaching skills of librarians that may adversely affect student learning performance by conveying the same learning content to all students. Additionally, the proposed system results in better learning performance for learners with the field-dependent cognitive style than learners with the field-independent cognitive style. Further, the proposed system provides more benefits in terms of library skills of application and comprehension than conventional librarian instruction. Moreover, the learning performance of students is not affected by their gaming skills. Therefore, student gaming skills do not need to be considered when adopting the proposed system in library instruction programs.