The objective of this paper is to test the hypothesis that immersive virtual reality environments such as those achievable through the head-mounted displays, enhance task performance in online engineering design activities. In this paper, task performance is measured by the time to complete a given engineering activity. Over the last decade, a wide range of virtual reality applications have been developed based on non-immersive and immersive virtual reality systems for educational purposes. However, a major limitation of nonimmersive virtual reality systems is the lack of an immersive experience that not only provides content to students, but also enables them to interact and learn in a completely 360 degree immersive environment. The authors of this work have developed a replica of a physical engineering laboratory in an interactive virtual learning environment. This research measures the difference in task performance between i) students exposed to an immersive virtual reality system and ii) students exposed to a non-immersive virtual reality system, in the interactive virtual environment developed by the research team. This research seeks to explore whether statistically significant differences in performance exist between these groups. Knowledge gained from testing this hypothesis will inform educators about the value and impact of immersive virtual reality technologies in enhancing online education. A case study involving 54 students in a product functional analysis task is used to test the hypothesis.