This paper describes an experiment where the effect of dynamic shadows in an immersive virtual environment is measured with respect to spatial perception and presence. Eight subjects were given tasks to do in a virtual environment. Each subject carried out five experimental trials, and the extent of dynamic shadow phenomena varied between the trials. Two measurements of presence were used - a subjective one based on a questionnaire, and a more objective behavioural measure. The experiment was inconclusive with respect to the effect of shadows on depth perception. However, the experiment suggests that for visually dominant subjects, the greater the extent of shadow phenomena in the virtual environment, the greater the sense of presence. Keywords. Virtual environment, virtual reality, presence, shadows, depth perception.