Recently, a growing number of Higher Education institutions have started to implement challenge-based learning (CBL) in study processes. However, despite the growing Higher Education attention to challenge-based learning, research on the method, especially in Engineering education, has not been extensively conducted and made publicly available to the community of researchers and teaching practitioners. To bridge this gap, this paper provides a case analysis of implementing challenge-based learning in a Master’s degree program for engineering students, aiming to highlight the main aspects of combining challenge-based learning and Sustainable Development Goal 11 (SDG 11), namely sustainable cities and communities. The findings are consistent with previous CBL studies revealing positive benefits of implementing the method; however, the paper adds novelty by showcasing the learning pathways that emerge to learners and teachers when CBL is implemented in an SDG-11-focused course.