There is currently a growing movement in the research of the application of computer game technology to produce materials suitable for education and training. This research to date has a narrow application-based focus, such as in the military and medical sectors, yet this research is broadening to applications in tertiary, secondary and primary education. This is significant since our current school children are 'Digital Natives', whose lives embrace this technology. It is our belief that they may benefit from learning within Educational Immersive Environments (EIEs), single and multiplayer environments which use computer game technology but which are neither computer games nor are designed according to computer game design principles. However, we acknowledge that computer game design principles can be of help in designing a captivating, motivating and 'fun' learning experience. This paper reports on a year-long research project developing an EIE suitable for Primary School Literacy Education, using the commercial game-engine "Unreal Tournament 2004". The project involved working closely with a local primary school in Worcester, UK. Our design process was based upon Constructivist and Experiential learning theories and included elements of instructional design principles (IDP). A mapping was made from these theories and principles onto the "affordances" of the game engine. We suggest that this mapping may form a significant part of establishing a theoretical basis for EIE design. The EIE content was informed by the teacher/practitioners and from consulting the Primary National Strategy Framework and web based resources. An iterative development methodology was employed involving the teachers at each key stage of the development process. A small-scale evaluation of the EIE was conducted using teacher-questionnaires and pupil observations. This revealed some significant indicators. The potential effectiveness of the EIE was judged by teachers and pupils to be high. Pupils showed a high level of motivation and engagement due to the freedom to roam, autonomy of choice and level of interactivity. However, we have reflected on shortfalls of the EIE indicated by the evaluation. Three concerns emerged: First, a possible conflict exists between giving the learners freedom of movement and choice of tasks, and the need for structured guidance. Second, the need to critically assess mechanisms of information delivery, especially related to structured guidance. Third, the need to review the separation of 'learning' and 'fun' spaces.