A three dimensional physical toy that can be manipulated by a user is connected to a computer. Interchangeable accessory parts can be plugged into the toy via mechanisms which identify the accessory parts immediately when they are plugged into the toy body. A software program running in the computer displays a graphical character representation of the toy, including the accessory parts that have been plugged into the toy in a virtual environment on a monitor screen. The toy and the accessory parts interact dynamically with the software program so that the graphical character representation of the toy appears on the screen exactly as it physically appears to the user. The toy interacts with the virtual environment in each stage of construction an as each accessory part is added or removed. Therefore, as various accessory parts are inserted into, or removed from, the toy, the graphical character representation of the toy interacts with the virtual environment in different ways. Some of the accessory parts have physical sensors built in to detect motion, bending, etc. These parts can be physically manipulated by the user causing a predetermined action between the graphic character and the virtual environment.