his chapter discusses the potential of three dimensional virtual worlds as venue for constructivist learning communities. To reach a balanced answer to the question whether virtual worlds are likely to evolve into satisfying eductional instruments (1) we retrace the historic trajectory of virtual world development and computer based learning, second we describe how (2) learning communities function in general and how virtual worlds in particular can be exploited for collective educational experiences. With this basis, we then present (3) a structured analysis of the strenghts, weaknesses, opportunities and threats (SWOT) found to bound the potential of SecondLife for institutionalized learning based on our expertise from working and teaching in virtual worlds. In conclusion we argue that a critical but optimistic approach towards virtual learning environments (and SecondLife in particular) is adequat. In our assessment virtual worlds bear great opportunities for educational purposes, however most of today’s educational institutions will be challenged to encompass the informal and holistic learning scenario.