An improved panoramic image based virtual reality/telepresence audio-visual system and method includes panoramic three-dimensional input devices, a computer processor, and a panoramic audio-visual output device. In one embodiment of the system the input devices comprise a sensor assembly including a plurality of positionable radar, camera, and acoustical sensors for recording signatures of all sides of three-dimensional subjects simultaneously. The computer processor integrates the sensor signals, processes signals as a virtual model, updates the model based on participant interaction, and selects and distributes portions of the processed virtual model for presentation on display units and audio speakers. The processor includes participant interactive input devices for instantaneous interaction with the virtual model. The panoramic audio-visual output device includes a head-mounted display or a closed structure having contiguous individual display units mounted in all viewable directions surrounding the participant. Conventional, stereoscopic, autostereoscopic, and holographic display systems are provided to view the panoramic three-dimensional image based model. Computer graphics, artificial intelligence, telecommunications, and vehicle control embodiments of the system are provided.