In everyday life, one increasingly encounters virtual characters. Virtual (online) worlds, on the one hand, are populated by avatars, that is, mediated human interlocutors represented by a virtual body. Examples are Second Life or Massively Multiplayer Online Role-Playing Games (MMORPG) like World of Warcraft. On the other hand, websites, pedagogical programs, or technological devices are increasingly being equipped with virtual characters programmed to act autonomously and to conduct basic verbal and nonverbal interaction with the human user. The present special issue focuses on the latter form of virtual characters that have been developed to facilitate human-technology interaction. These agents are developed for, and sometimes already employed in, various areas of application: commercial applications such as so-called chatbots on websites (e.g., Anna of the Ikea website), virtual trainers such as that of the Wii fit, or virtual agents in navigation systems (http://www.charamel.com/). Research groups are developing and testing virtual agents for information kiosks as health advisors, as TV/VCR assistants or as virtual teachers and tutors. Although the development of and research on virtual agents is first and foremost being advanced by researchers from computer science, psychological research now also plays an important role. In order to equip virtual agents with humanlike communication skills and to iteratively optimize the systems with the help of evaluation studies, psychological knowledge as well as psychological methods are needed. However, psychological research on embodied agents is fruitful not only with regard to applied research, but also with respect to fundamental research.