This paper presents the findings from one of the first empirical research studies which has investigated the impact of Inter-Life; a novel three-dimensional immersive virtual learning environment, on learning and development of social and educational life transition skills in a group of looked after and accommodated children. Drawing on social constructivism in which meaningful learning is related to context and situated in practice, we report on a series of Inter-Life workshops that enabled young people to work together and "through the processes of participation in authentic learning activities" contributed to the development of life transition skills such as self-confidence, empathy, negotiation and mediation skills, teamwork and active problem-solving skills. The novel affordances of the Inter-Life virtual world which contributed to the development of the learning community included the ability to personalise learner engagement and activities from the outset along with "co-presence" and "immersion" and the flexibility provided by the innovative, technology-enhanced Inter-Life platform. This study presents some empirical evidence to demonstrate the efficacy of new models of learning that are mediated by innovative malleable technologies that can be shaped by the learner in a participatory manner.