The internationalization of higher education increasingly involves 'Internationalization at a Distance' (IaD), a modality that alters how students engage with learning communities across geographical and cultural divides. Despite its growing prevalence, the complexity of fostering student engagement in transnational settings remains underexplored. This study investigates the application of the Community of Inquiry (CoI) framework--comprising teaching, cognitive and social presence--within a transnational Master of Education programme delivered jointly by an Australian university and a Chinese educational institute. Findings reveal significant challenges in achieving robust CoI elements due to geographical separation and cultural disparities, which undermine effective engagement. In response, students developed Collaborative Cell Groups, informal, peer-led communities that enhance engagement by localizing knowledge, fostering social cohesion and supplementing teaching presence. These groups illustrate both the potential and limitations of informal peer support within formal learning structures. By critically examining the interplay between formal and informal learning communities, this study offers new insights into optimizing engagement in cross-cultural distance education.