This paper describes a multi-user role-playing environment, referred to as "e-drama", which enables groups of people to converse online, in scenario driven virtual environments. The starting point of this research, is an existing application known as "edrama", a 2D graphical environment in which users are represented by static cartoon figures. Tools have been developed to enable integration of the existing "edrama" application with several new components to support avatars with emotionally expressive behaviours, rendered in a 3D environment. The functionality includes the extraction of affect from open-ended improvisational text. The results of the affective analysis are then used to: (a) control an automated improvisational AI actor--EMMA (emotion, metaphor and affect) that operates a bit-part character in the improvisation; (b) drive the animations of avatars using the Demeanour framework in the user interface so that they react bodily in ways that are consistent with the affect that they are expressing. Finally, we describe user trials that demonstrate that the changes made improve the quality of social interaction and users' sense of presence. Moreover, our system has the potential to evolve normal classroom education for young people with or without learning disabilities by providing 24/7 efficient personalised social skill, language and career training via role-play and offering automatic monitoring. (Contains 12 figures, 5 tables, and 1 footnote.)