With the post-pandemic situation, digitalization has revolutionized physical teaching into online teaching and has become a common practice. The engagement of students has been essential for their good academic performance which can be ensured by the active participation of the students and this is a real challenge for the teachers. However, sometimes in online and physical teaching, teachers are also involved in rationalized knowledge hiding, which leads to the disengagement of the students, and this ultimately affects their academic performance. Therefore, the present study aims at measuring the students’ disengagement in the teaching classes, both physical and online. The population of the present study is the students from the universities of China belonging to different fields of study. The sample size for this study is 246. The data are obtained through the Questionnaire surveys. The existing study has assessed the role of teachers’ rationalized knowledge hiding behaviors in the disengagement of students and their lesser grades. It has been found that rationalized knowledge hiding in online teaching does not affect students’ performance; however, it makes students disengage from their studies in physical classes. Interestingly, the rationalized knowledge hiding in physical teaching has negatively affected the performance of the students. Furthermore, the mediating role of the students’ disengagement has been found significant in this study. Organizations, especially universities, can ensure maximum knowledge sharing by motivating the instructors through positive reinforcements. This study will be useful for the curriculum coordinators of different departments in ensuring the maximum outcome of the teaching classes, workshops, and seminars conducted either physically or online to avoid the rationalized knowledge hiding of the teachers.