This National Science Foundation funded project is studying graphical multi-user virtual environments (MUVEs) to investigate whether using this interactive medium in classroom settings can simulate real-world experimentation and can provide students with engaging, meaningful learning experiences that enhance scientific literacy. In the project's River City curriculum, teams of middle school students are asked to collaboratively solve a digital 19th century city's problems with illness, through interaction with digital artifacts, tacit clues, and computer-based 'agents' acting as mentors and colleagues in a virtual community of practice. This article describes the design-based research strategy by which we are currently extending an educational MUVE environment and curriculum. Through several iterations of design-based research, we have refined our curriculum, the MUVE environment, and the theories underlying our design.