This research examines the relationship between cultural distance (CD) and intercultural adjustment for Australian military advisers who trained and lead foreign soldiers during the Vietnam War. Situated cognition is used to identify six salient attributes of CD for the military advisers, and a conceptual framework is proposed on the basis of shared mental models (schemata) that illustrate the relationship between CD and expatriate adjustment in an extreme context. The findings highlight the significance of professional and ethical differences between the Australians and Vietnamese, foreignness, language, political and social milieu, and face management. The research is significant in the following: extending the literature on CD and expatriate adjustment from an erstwhile overwhelming focus on adjustment in a mundane environment to the extreme context in which poor intercultural collaboration can have potentially life‐threatening effects; highlighting the role of “boundary spanners” in intercultural collaborations and negotiations; and providing insights into human behavior in a complex, dynamic context for other organizations operating in an extreme context. Copyright © 2013 John Wiley & Sons, Ltd.