Three-dimensional (3-D) multi-user virtual environments (3-D MUVEs) have been used to provide language learners with realistic scenarios in which verbal and non-verbal interactions are simulated. However, little is known of the underlying factors that shape interaction in avatar-based virtual worlds. This study examined the perceptions of 38 student teachers of second language (L2) interaction in relation to the learning and teaching of Chinese as a foreign language (CFL) by using 3-D MUVEs. The data that were collected through reflection reports and interviews revealed that the key to the success of promoting L2 interaction may be contingent on the access to realistic scenarios and the presence of non-verbal cues. The participating teachers also offered suggestions regarding the future use of 3-D MUVEs to foster L2 interaction in the learning and teaching of CFL. Overall, the teachers considered this unique platform to be a promising venue where enhanced interaction may contribute to the understanding of target linguistic input, as well as the communication of the learners. This study has provided insight into the dynamic forces that mediate L2 interaction in 3-D MUVEs from the viewpoints of CFL teachers.