Co-Space refers to interactive virtual environment modelled after the real world we are situated in. Through realistic 3D modelling and animation technologies, Co-Space simulates the real world in terms of look-and-feel of our physical surrounding. With the advancement in pervasive sensor network, Co-Space may also capture and mirror the happening in the physical world in real time. The development of Co-Space thus offers great opportunities for delivering innovative applications and services. Specifically, for enriching the experience of users in Co-Space, it is essential to incorporate knowledge facilities in the form of intelligent agents to enhance the interactivity and playability within. This paper will begin with a brief review of this emerging field of work related to agents in virtual worlds and integrated cognitive architectures. We then discuss the key requirement, issues and challenges in making Co-Space interactive and intelligent. Following the notion of embodied intel...