The development and maintenance of a virtual reality (VR) system requires indepth knowledge and understanding in many different disciplines. Three major features that distinguish VR systems are real-time performance while maintaining acceptable realism and presence, objects with two clearly distinct yet inter-related aspects like geometry/structure and function/behavior, and the still experimental nature of multi-modal interaction design. Until now, little attention has been paid to methods and tools for the structured development of VR software that addresses these features. Many VR application development projects proceed by modeling needed objects on conventional CAD systems, then programming the system using simulation packages. Usually, these activities are carried out without much planning, which may be acceptable for only small-scale or noncritical demonstration systems. However, for VR to be taken seriously as a media technology, a structural approach to developing VR applications is required for the construction of large-scale VR worlds, and this will undoubtedly involve and require complex resource management, abstractions for basic system/object functionalities and interaction tasks, and integration and easy plug-ins of different input and output methods. In this paper, we assembled a comprehensive structured methodology for building VR systems, called CLEVR (Concurrent and LEvel by Level Development of VR System), which combines several conventional and new concepts. For instance, we employ concepts such as the simultaneous consideration of form, function, and behavior, hierarchical modeling and top-down creation of LODs (levels of detail), incremental execution and performance tuning, user task and interaction modeling, and compositional reuse of VR objects. The basic underlying modeling approach is to design VR objects (and the scenes they compose) hierarchically and incrementally, considering their realism, presence, behavioral correctness, performance, and even usability in a spiral manner. To support this modeling strategy, we developed a collection of computeraided tools called P-VoT (POSTECH-Virtual reality system development Tool). We demonstrate our approach by illustrating a step-by-step design of a virtual ship simulator using the CLEVR/P-VoT, and demonstrate the effectiveness of our method in terms of the quality (performance and correctness) of the resulting software and reduced effort in its development and maintenance.