The iCinema Centre for Interactive Cinema Research at UNSW has created a versatile virtual reality theatre that, by combining real-time 360-degree omnistereo projection with surround audio and marker-less motion tracking, provides a highly immersive and interactive environment for up to 20 users. The theatre, codenamed AVIE, serves as the Centre's principal platform for experiments in interactive and emergent narrative, artificial intelligence, human-computer interfaces, virtual heritage, panoramic video and real-time computer graphics, as well as our primary platform for public exhibition of iCinema projects. This paper briefly discusses the design of the system, technical challenges, novel features and current and future applications of the system. We believe our system to be the first and only 360 degree cylindrical stereo virtual reality theatre constructed to date.