Interactive simulation in automotive driving has enhanced the studies of driver behaviors, traffic control, and vehicle dynamics. The development of virtual reality (VR) technology leads to low cost, yet high fidelity, driving simulator become technically feasible. However, a good implementation of high realism and real-time interactive three-dimensional (3D) virtual environment (VE) in an automotive driving simulation are facing many technical challenges such as accessibility, dissimilarity, scalability, and sufficiency. The objective of this paper is to construct a virtual reality system for an automotive driving simulator. The technology with variations of terrain, roadway, buildings, and greenery was studied and developed in the VE of the simulator. Several important technical solutions in the construction of VE for driving simulation had been identified. Finally, the virtual reality system was interactively used in a driver-in-loop simulation for providing direct road elevation inputs to the analysis of vehicle dynamics model (VDM). The results indicated identical matching between the VDM inputs and the VE outputs. The outcomes of this paper lead to a human-in-the-loop foundation of a low-cost automotive driving simulator in the vehicle engineering research.