In this paper we investigated the relationship between the use of a digital tool for algebra and students’ algebraic understanding from an instrumentation theory perspective. In particular, we considered the schemes that students developed for algebraic substitution using an applet called Cover-up. The data included video registrations of three seventh-grade Indonesian students (12-13 year-olds) using the applet. The results showed that while solving equations and related word problems, the students developed schemes for algebraic substitution in which technical skills and conceptual understanding are intertwined. The schemes gradually were adapted to solve larger classes of equations. We found that crucial factors in this development called instrumental genesis are the characteristics of the applet and the task design, the role of a teacher, and the interaction among students.