Let us consider the presentation by computers of rich, highly interactive worlds that are inhabited by dynamic and complex characters, and shaped by aesthetically pleasing stories. We shall call this interactive drama, and we believe that it requires strong characters, aesthetic presentation, and long-term dramatic structure. This paper describes an experiment designed to help us understand how to create interactive drama. Three principal questions are addressed. One, how does it feel to be immersed in a dramatic virtual world filled with characters and story? Two, what is required of the characters (actors) in such a virtual world? Three, what is required of the story and its director? We present an introduction to interactive drama, summarize the Oz system designed to create and present such experiences, and describe our experiment in detail. Finally, drawing from the experiment, we suggest several hypotheses about interactive drama.