In this literature review, the authors examined three key areas that were chosen as relevant to the challenges faced by small rural schools, and collaborative practice between schools working in virtual learning environments in New Zealand. The first area was rural education, where definitions of rurality and the demographics and characteristics of small rural New Zealand schools were described, and the challenges and innovations in rural school setting were explored. The second area was collaborative practice, where features of effective collaboration were discussed as is the professional practice and theory that underpins collaboration across school networks. Finally, the third area was virtual learning, which was defined and described, along with the benefits and challenges of learning in virtual environments, and the growth of networked learning communities in New Zealand was chronicled. A comprehensive scope of the current New Zealand education landscape was included to provide the context in which this review resides.