This design-based research study examines how a collaborative annotation tool, Perusall, supported the development of community within an asynchronous online graduate course. Students read and engaged with assigned texts uploaded to Perusall each week, providing numerous opportunities for students to interact and collaborate with each other using the tool's various sharing and communication features. Both text interactions and peer-to-peer interactions on Perusall increased throughout the course, with peer-to-peer interactions increasing at a greater rate, indicative of community growth within the course. Collaborative annotation tools capture students' thinking and processing in the moment, more closely mirroring the learning that one might see in a face-to-face class when students discuss content with their instructor and/or classmates. This study offers insights for teachers, teacher educators, and school leaders about new approaches for developing community in online educational contexts, especially considering the drastic shift to online learning as a result of the COVID-19 pandemic.