In this paper we focus on lessons learned from developing information systems (IS) higher education in an inter-organizational (IO) network focusing possibilities and challenges. Developing higher education is one area among others where organizing joint efforts in networks are possible. An IO R&D project is described and analyzed in this paper. The overall research design is qualitative and interpretive. The research is based on a case study of the project and the network collaboration between four Swedish universities as participants. Theoretical concepts that characterize an IO relationship (continuity, complexity, symmetry, and formality) and concepts that describe dimensions of such relationships (links, bonds, and ties) helped us to describe and to analyze interaction in the IO network together with the characterization of context, content and process related to the development work. The IO network in this paper is classified as a joint problem solver; a functional network. Findings in the paper address several possibilities and challenges related to higher education development in IO networks. Findings highlight e.g. the need to involve active teachers and researchers, to manage distributed teams, to be aware of the critical and sensitive matter of opening up the "black box" of courses using critical friends, and the time and effort needed for anchoring projects and changes at the participating universities.