Virtual reality has achieved an adequate level of development for it to be considered in innovative applications such as education, training, and research in higher education. Virtual reality offers both opportunities and challenges for the educational sector. One of the challenges of virtual reality technology is the costs associated which have been unaffordable for educational institutes. However, in recent years, computer hardware and software development has made it more feasible to incorporate virtual reality technology into future teaching strategies. Despite the cost challenges, educational benefits of implementing virtual reality remain compelling. This paper explains virtual reality principle and describes the interactive educational environment developed at WMG, the University of Warwick. It also discusses the benefits of using state-of-the-art 3D photorealistic interactive and immersive virtual environment for engineering undergraduates and postgraduate teaching, learning and training.