Morality originates in dispositions and attitudes formed in childhood and early adolescence. Fantasy play and both the perspective taking and interpersonal negotiation of conflicts that it affords, have been causally linked to the development of moral reasoning and a theory of mind. A closer examination of the self-regulated processes involved implicates a number of contributing factors that video games and virtual worlds are well suited to encourage. The authors present recommendations suggesting the ways in which such technology can facilitate moral development by supporting and simulating diverse social interaction in ways leading to the promotion of self-efficacy, critical thinking, and consequential decision making.