Recently, computer technology and multimedia elements have been developed and integrated into teaching and learning. Entertainment-based learning environments can make learning contents more attractive, and thus can lead to learners' active participation and facilitate learning. A significant amount of research examines using video editing software to create video clips for digital storytelling activities. However, in this study, we suggest performing digital storytelling in virtual worlds with open-ended, edutainment elements, and place more stress on the writing process. The purpose of this study is to examine the effects of writing for digital storytelling on writing self-efficacy and on flow in the virtual reality learning environment known as Second Life. The researchers organized an activity for undergraduate students to create digital stories. Participants were divided into two groups. One group created their digital stories in Second Life. The other group created their digital stories off-line. The two groups' independent sample t-tests were employed to compare writing self-efficacy and flow. The results of the experiment demonstrate that digital storytelling in a virtual learning environment is more effective than digital storytelling off-line. The findings of this study suggest that the technique of digital storytelling can be used effectively in classroom settings to teach writing.