A persistent issue in Australia, and globally, is how to improve participation rates in higher education for students from regional and rural areas. In this paper, we tackle this challenge by exploring the idea of a Community Embedded University (CEU). We draw on empirical data from three participatory co-design workshops with university students (n = 15) and staff (n = 6), to provoke discussion on what a CEU model might look like, the activities it might engage in, and how it would collaborate with local communities to create stronger partnerships and support student engagement. Through our study, we identify key value propositions to a CEU, including fostering students' sense of belongingness and opportunities to engage in relationship-rich pedagogy through community-university collaborative teaching. However, we also identify several challenges to enacting a CEU, such as complexities relating to distributed power-sharing and decision-making, and how to situate learning experiences in place while maintaining flexible learning spaces. We propose that, while the idea of a CEU may remain an idealised model, our outlined principles to creating a CEU may be a useful framework for universities to reflect upon and consider how they engage with their local communities.