3D virtual reality, including the current generation of multi-user virtual worlds, has had a long history of use in education and training, and it experienced a surge of renewed interest with the advent of Second Life in 2003. What followed shortly after were several years marked by considerable hype around the use of virtual worlds for teaching, learning and research in higher education. For the moment, uptake of the technology seems to have plateaued, with academics either maintaining the status quo and continuing to use virtual worlds as they have previously done or choosing to opt out altogether. This paper presents a brief review of the use of virtual worlds in the Australian and New Zealand higher education sector in the past and reports on its use in the sector at the present time, based on input from members of the Australian and New Zealand Virtual Worlds Working Group. It then adopts a forward-looking perspective amid the current climate of uncertainty, musing on future directions and offering suggestions for potential new applications in light of recent technological developments and innovations in the area.