Computer generated virtual environments have reached a level of sophisticat
ion and ease of production that they are readily available for use in the a
verage psychology laboratory. The potential benefits include cue control, i
ncorporation of interactivity and novelty of environments used. The draw-ba
cks include limitations in realism and lack of fidelity. In this chapter we
describe our use of virtual environments to study how 3D space is encoded
in humans with special emphasis on realism and interactivity. We describe t
he computational methods used to implement this realism and give examples f
rom studies concerning spatial memory for object form, spatial layout and s
cene recognition.