This document reports the results of a literature review conducted in the summer of 1997 on the applications and activities, design requirements and guidelines of relevance to life-like virtual environments. Virtual environments hold the promise of simulating life experiences with such realism as to generate sensations similar if not equal to those aroused by the real world. At the heart of the promise held by the technology lies the identification and design of the life-like qualities that must be part of the virtual world in order for the user to believe in a new reality. The purpose of this report was to collect and group design requirements and principles according to the key activities performed within various applications: viewing, exploration and the manipulation of virtual objects. Eight categories of design requirements were found to drive the creation of a virtual environment. Design principles aim to support human sensory, cognitive and ergonomic requirements. Specifically, visual, auditory and haptic principles address human sensory requirements. Principles relevant to memory capacity, information load and mental models are defined under cognitive requirements. Physical and physiological guidelines aim to satisfy ergonomic requirements. Given the rapid evolution of the field, this document does not presume to contain an exhaustive survey of the literature but hopes to provide designers of life-like virtual environments with a useful frame of reference.