An interactive exercise apparatus engages a user's mind and body. The apparatus comprises an exercise mechanism and a steering mechanism for manipulation by the user to achieve exercise and to indicate a direction of motion. The exercise mechanism can be, for example, the steps of a stair climbing simulator or the pedals of a bicycle, preferably a recumbent bicycle. A simulated environment (e.g., an interactive simulated three-dimensional environment or an interactive simulated three-dimensional fluid environment) is generated by a computer and displayed on a display system for the user. The user manipulates. the exercise mechanism and the steering mechanism to travel substantially unrestricted throughout the simulated environment. The computer controls the exercise mechanism and monitors the exercise mechanism and the steering mechanism to determine user position in the simulated environment. The display provides a visual display of the user's position in the simulated environment. A plurality of the interactive exercise apparatus can be networked together to allow group participation in the simulated environment.