In this paper we show how three-dimensional virtual reality models can be used in teaching the structures and functions of hydraulic components. This technique allowed the teacher to show exactly how a slide moved inside a valve and how it affected on the opening of flow orifices thus increasing or decreasing the flow. Students were taken on a tour inside components to examine the critical points in component behaviour. The use of virtual reality benefits the students in learning hydraulic phenomenon faster and more accurately. In this paper the techniques and use of virtual reality system in teaching and research are presented.