Young people’s use and understanding of the Internet is still under-researched. We argue that researching alongside young people in technological settings (a virtual world on the Internet in this paper) is a complicated nexus of conceptual, methodological and theoretical challenges. We argue that these are in dialectical, and sometimes incoherent, relationships with the realities of research processes and young people’s lived experiences with ICTs. The ESRC/EPSRC-funded Inter-Life Project developed a ‘Virtual Research Community’ in Second Life™, to investigate how young people can work creatively to develop their own agency and subjectivities. We reflect on these challenges as they articulated with the ‘Inter-Life’ project’s aims. They include the need for more empirical evidence of the realities of young people’s lives with ICTs, and for re-theorisation of their subjectivities in ICT settings. We interrogate the challenges of participatory research in such settings, and the role of creative practices and virtual spaces in finding a voice and being a participatory researcher. In the second part we illustrate the realities of researching in a virtual world, through the lived experience of young people who worked with us. We explore how Activity Theory might assist in the methodological and analytical work of researching young people’s creativity in a virtual world.