With the advances in digital technology, the role of online distance learning has become increasingly prominent, particularly in expanding educational accessibility for diverse student populations. However, enhancing student engagement in these settings remains a significant challenge. Grounded in the Study-Demands Resources (SDR) model, this study aims to examine the direct effect of the variables of study demand, psychological capital, student exhaustion, and student engagement among online distance learning postgraduate students in Malaysia. Data was collected from online distance learning students (N = 250) using a judgmental sampling method, and hypothesis analysis was conducted using Partial Least Squares-Structural Equation Modelling (PLS-SEM). The results demonstrate that study demands have a positive effect on students’ exhaustion, while student exhaustion has a negative effect on student engagement. Additionally, this result also found that psychological capital positively affects students’ engagement. The findings contribute to a deeper understanding of student engagement in online distance learning settings, highlighting the role of study demands and resources in the higher education sector. Meanwhile, this study also provides practical implications for universities and policymakers to better support student mental health and engagement in virtual settings.