Three-dimensional virtual world environments are providing new opportunities to develop engaging, interactive experiences in education. These virtual worlds are unique in that they allow individuals to interact with others through their avatars and with objects in the environment, and can create experiences that are not necessarily possible in the real world. To assess the impact that these virtual worlds are currently having on education, a literature review is conducted to identify current applications, benefits being realized, as well as issues faced. Based on this review, virtual world capabilities, experiences, and factors associated with educational opportunities are presented as well as gaps in meeting pedagogical objectives. Practical and research implications are then addressed. Virtual worlds are proving to provide unique educational experiences, with its potential only at the cusp of being explored.