This study investigates how bias, cooperation, and power asymmetries unfold between minority and majority groups in immersive social virtual reality (SVR). Seventy-two Jewish Israelis—including Ethiopian Israelis, ultra-Orthodox (Haredi), and secular participants—took part in structured collaborative and competi tive sessions within a shared virtual gallery, and their behaviors were analyzed through qualitative observation and post -session questionnaires. Five interrelated themes emerged: spatial dynamics of partner selection, whereby initial choices were driven by immediate virtual proximity rather than cultural identity; cultural identity signaling in VR, as verbal references and customized avatar elements (e.g., head coverings and color palettes) subtly reinforced group belonging; a digital divide in VR interactions, with technological proficiency functioning as social capital that enabled skilled users to assume leadership roles; gender roles in virtual interactions, where explicit gender cues embedded in avatars saw women more often mediating or supporting and men directing task flow; and trust building through virtual interaction, progressing from competence-based partner selection to cross-group coalitions and an emotional shift from discomfort to connection. Together, these findings show that while SVR mirrors real-world power structures and identity cues, its immersive, task-oriented design can also catalyze new cross -group bonds, highlighting the need to narrow technological gaps and encourage inclusive collaboration to realize SVR’s potential as a bridge across social divides.