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Virtual Reality (virtual environment technology, VET) has been widely available for twenty years. In that time, the benefits of using virtual environments (VEs) have become clear in many areas of application, including assessment and training, education, rehabilitation and psychological research in spatial cognition. The flexibility, reproducibility and adaptability of VEs are especially important, particularly in the training and testing of navigational and way-finding skills. Transfer of training between real and virtual environments has been found to be reliable. However, input device usage can compromise spatial information acquisition from VEs, and distances in VEs are invariably underestimated. The present review traces the evolution of VET, anticipates future areas in which developments are likely to occur, and highlights areas in which research is needed to optimise usage.