Role-playing is an essential component to social skills training in early childhood education. Current programs are either not interactive enough or confrontational and frightening. Combining virtual reality and performance animation can provide an environment for children's learning that is non-threatening, yet interactive enough for authentic, constructive interaction. This study begins with a review of literature and contemporary applications of early childhood education, performance animation, and virtual reality. The question of how performance animation and virtual reality can contribute to a lesson that uses role-play was explored through prototyping components of an immersive environment for role-play with digital characters. Early childhood educators evaluated a prototype and discussed its implications in the field of earlychildhood education. Conclusions are drawn based on focus group feedback and the designer's experience in combining these fields. Future work in combining performance animation and virtual reality to benefit early childhood education is proposed.