This paper outlines two major aspects of virtual environments for architectural design. On the one hand it focusses on how to use virtual reality as an extended tool to generate spatial design by building up and interacting with a three-dimensional digital model. On the other hand it describes - based on a case study - the relation between perception, interaction and immersion in virtual environments. Both approaches can be interconnected to a continues design process, that allows the designer to create, manipulate, visualize and decide on spatial concepts in a holistic three-dimensional simulation.