Recently, virtual worlds have excited the interest of Computer Supported Cooperative Work (CSCW) researchers, as potential formal and informal meeting environments for virtual teams. We report an action research study of a locally distributed team of researchers using a dedicated environment within the virtual world Second Life to support their collaboration. We investigate, here, the benefits, challenges and opportunities of virtual worlds as collaboration tools. We found that effective collaboration can take place in virtual worlds but that, in respect of synchronous collaboration, there appears little additional value in the 3D spaces and avatars of virtual worlds over more traditional video-conferencing, The results suggest that the specific benefits of virtual worlds do not fully come into play in a synchronous teamwork context, but there is some evidence of value over longer periods of collaboration – support for projects – and for the looser collaborations which typify communities.