In this paper we describe the design of a managed learning environment called MTutor, which is used to teach an online Masters Module for teachers. In describing the design of MTutor pedagogic issues of problem-based learning, situated cognition and ill-structured problems are discussed. MTutor presents teachers with complex real-life teaching problems, which they are required to solve online through collaboration with other teachers. In order to explore the influence of this online learning experience on the identity and practice of teachers, we present the results from a small-scale study in which six students were interviewed about their online experiences. We conclude that, within the sample, students' engagement with online problem-based learning within their community of practice positively influenced their professional practice styles, but that there is little evidence to suggest that online identity influences real-life practice.