Virtual Reality (VR) technology holds promise as a virtual prototyping tool for mechanical assembly; however, several developmental challenges still need to be addressed before virtual prototyping applications can successfully be integrated into the product realization process. This paper describes the development of SHARP (System for Haptic Assembly & Realistic Prototyping), a portable VR interface for virtual assembly. SHARP uses physically-based modeling for simulating realistic part-to-part and hand-to-part interactions in virtual environments. A dual handed haptic interface for realistic part interaction using the PHANToM® haptic devices is presented. The capability of creating subassemblies enhances the application’s ability to handle a wide variety of assembly scenarios. Swept volumes are implemented for addressing maintainability issues and a network module is added for communicating with different VR systems at dispersed geographic locations. Support for various types of VR systems allows an easy integration of SHARP into the product realization process resulting in faster product development, faster identification of assembly and design issues and a more efficient and less costly product design process.