The learning factory is an emerging ‘hands-on’ approach to teaching advanced manufacturing technologies. This study aims to identify the key challenges for implementing learning factory in I4.0 arena. Since no past research works addressed the challenges associated with learning factory, participatory surveys were conducted to identify the key challenges. Industry leaders, policymakers, trainers, and academicians were selected as participants of the survey to collect a broad perspective from individuals at various levels. The experts’ feedback was synthesised in a mind map depicting challenges in implementing learning factories. Then, the interrelationship between the identified challenges is evaluated using decision-making trial and evaluation laboratory technique. Consequently, the significance and nature of each challenge is determined. The challenges identified in this work, and the findings of empirical analysis will help the industry and academia in creating and implementing Industry 4.0 learning factories.