The present invention relates to a method and an apparatus for combining virtual reality and real-time environment. The present invention provides a system that combines captured real-time video data and real-time 3D environment rendering to create a fused (combined) environment. The system captures video imagery and processes it to determine which areas should be made transparent (or have other color modifications made), based on sensed cultural features and/or sensor line-of-sight. Sensed features can include electromagnetic radiation characteristics (i.e. color, infra-red, ultra-violet light). Cultural features can include patterns of these characteristics (i.e. object recognition using edge detection). This processed image is then overlaid on a 3D environment to combine the two data sources into a single scene. This creates an effect where a user can look through `windows` in the video image into a 3D simulated world, and/or see other enhanced or reprocessed features of the captured image.

 
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