The aim of the Inter-Life Project was to investigate the use of virtual worlds and creative practices to support the acquisition of transition skills for young people to enhance their management of important life events. In particular, the authors have been investigating the role of the Inter-Life virtual worlds in supporting the development of life transition skills in young people, some of whom were in the care of local authorities. Creative practices, such as photography, digital storytelling and filmmaking, were used as a vehicle to enable young people to access and develop new personal and shared narratives as they worked together with researchers over an extended period on 'Interlife Island'. The Inter-Life Project created an embryonic virtual social research laboratory in order to study how young people can use a virtual world creatively, working together as a research community to develop skills that will help them navigate their key life transitions. The project focuses on how participants act and develop in InterLife, while engaged in co-designed creative and research activities. It also examines how the skills and understandings that were developed through a range of creative practices map onto their real-world experience. The project environments (based upon the commercial platform 'Second Life') incorporate 'in-world' data-gathering tools (as distinct from the 'transition tools' created for the participants' use) that support content analysis. Such data enable the analysis of complex activities in the virtual world using activity theory as a theoretical perspective. The skills acquired and the development of identities as young people engage in shared activities are reported and analysed. The article concludes by assessing the potential of augmented 3D digital technologies to assist young people in the social and emotional challenges of transition in their lives. It also considers the potential of 3D environments to support student transitions in higher education, with particular reference to art and design education.