In this study, to be able to understand the role of the children’s interactions with each other and the role of online and offline communities on children’s play and digital literacy practices, we examined a group of children’s collaborative play within the Club Penguin virtual world while they were engaging in an after‐school setting. We had eight participants (one girl and seven boys) between 5‐8 years old. During our study, the participants worked independently, but sat side by side in the computer room as they controlled their penguin avatars in the virtual world. To answer the central research questions, we used several kinds of data collection methods. We performed participant observations, took fieldnotes, and videotaped all 6 one‐hour‐long sessions during our study. Since we focus particularly on the interactions among children and their effects on play and literacy practices, we employed Vygotsky’s Zone of Proximal Development (ZPD) concept as our theoretical framework. Also, to be able to analyze the influence of children’s online and offline communities on their play and digital literacy practices, we used the second‐generation activity theory.