We use the Herschel Astrophysical Terahertz Large Area Survey (H-ATLAS) Phase I data to study the conditional luminosity function of far-IR (250 μm) selected galaxies in optically selected galaxy groups from the Galaxy And Mass Assembly (GAMA) spectroscopic survey, as well as environmental effects on the far-IR-to-optical colour.We applied two methods, which gave consistent results for the far-IR conditional luminosity functions. The direct matching method matches H-ATLAS sources to GAMA/SDSS (Sloan Digital Sky Survey) galaxies, then links the optical counterparts to GAMA groups. The stacking method counts the number of far-IR sources within the projected radii of GAMA groups, subtracting the local background. We investigated the dependence of the far-IR (250 μm) luminosity function on group mass in the range 1012 <Mh <1014 h-1M⊙ and on redshift in the range 0 <z 1012 h-1M⊙. We also find that the far-IR-to-optical colours of H-ATLAS galaxies are independent of group mass over the range 1012 <Mh <1014 h-1M⊙ in the local Universe.We also compare our observational results with recent semi-analytical models, and find that none of these galaxy formation models can reproduce the conditional far-IR luminosity functions of galaxy groups. © 2014 The Authors.