Many children between the ages of four and twelve log in to Web-based virtual play spaces each day, and these virtual worlds are quickly becoming an important aspect of their out-of-school lives. Consequently, educators' challenge is to see how they can leverage virtual spaces, such as the virtual play spaces, for learning and literacy. Over the last two years, the author has explored several virtual worlds in depth both as a participant and as an observer. In this article, he describes what is happening in these spaces, and the design features that make them both attractive to children and useful venues for learning. Fluency in virtual space as a new literacy is not meant to discount or replace existing conceptions of literacy; rather, it is meant to be additive and complementary. School librarians need to explore the link between this new literacy and older literacies, particularly when addressing how technology use potentially reinforces and exacerbates existing gaps in decoding and problem solving among young people. The extent to which children participate in virtual worlds suggests that it is not a passing fad, but may instead expose new ways of teaching them to work collaboratively and creatively. Rather than blocking these sites, educators should look for ways to leverage their learning and problem solving aspects, how they motivate information seeking and use, and how they provide vital agency to children to take charge of their own learning.