The future of educational technology has been envisioned to have increasing focus on simulations, game based learning, virtual learning environments and virtual worlds. The technologies aim to provide authentic learning and enable deeper, more complex and contextual understanding for students. To study the impact of virtual learning environments for natural sciences and engineering education, we have designed and implemented a virtual laboratory, LabLife3D, in Second Life. To date we have designed six virtual laboratory exercises in the biological sciences and chemistry and additionally created a system to gather behavioristic data during laboratory simulations for the purpose of learning analytics. This paper presents the design process of laboratory exercises and discusses the contentspecific learning goals and outcomes. Additionally, this paper discusses the use of heuristic usability review used to improve the virtual learning environment. Lastly, the results from student and teacher interviews are presented, together with results of the learning analytics study. The discussion also includes student identified affordances and barriers for learning. We conclude that authentic and deep learning is possible within virtual worlds. Furthermore, the results of this study are not only limited to virtual worlds, but could also apply to other areas of digital educational technology.