This study examines the effect of using an online 3D virtual environment in teaching Mathematics in Primary Education. In particular, it explores the extent to which student engagement--behavioral, affective and cognitive--is fostered by such tools in order to enhance collaborative learning. For the study we used a purpose-created 3D virtual environment and a macro-script incorporating learning tasks related to basic fractions. The study itself took place during four teaching sessions in a primary school classroom. The data collected and analyzed included chat logs, classroom observation notes and the results of pre- and post-tests. The findings indicate that the 3D virtual environment actively engages the students' interest and leads to richer interaction between them. This in turn results in a higher level of student engagement in the collaborative learning process. We believe that 3D virtual environments provide novel learning opportunities. However careful design is necessary in order to use their full potential. (Contains 7 tables and 8 figures.)