Purpose: The purpose of this paper is to analyze the dynamics facing transnational education (TNE) in Australia through literature review in three major areas: policy changes in Australia and major importing countries of Australian TNE, and recent development in online learning and the impact of the prevailing TNE models. The paper concludes by shedding some light on how these changes could affect the sustainability of the growth of Australian TNE in the future. Design/Methodology/ Approach: The paper is based on review of literature and use of secondary data on TNE in Australia. The paper analyzes the external quality audit reports with focus on TNE. It finally analyzes the future sustainability of Australian TNE based on growth of higher education in Asia and emergence of online learning. Findings: TNE is experiencing growth in Australia. Based on the current model such as setting overseas campus and partnerships, the growth may not be sustainable. The emergence of online learning and developments in Asian higher education may pose increased risk and competition. TNE has been subject to external scrutiny through the external quality agency in past. The current compliance-driven quality assessment may put the transnational quality assessment at risk with increased focus on assessing the quality based on review of documentation. Originality/Value: The paper is original and it is based on Australian TNE.