As distributed virtual environments(DVE) grow in size, the key aspect to consider is scalability for interactive performance. One of the approaches for the scalability is a region management : dividing a virtual world into several regions and/or localizing the area of interest of the participants. Most DVE systems using the region-partitioning approach have disjoint regions and allow interactions between the users of adjacent regions. However, users of these systems have to be always informed of the status of all the users in the neighboring regions of interest. This causes communications overhead to the users who wish to interact with other users across the regions, thus, making the system less scalable. It is our observation that, in most cases, users would interact with adjacent users, instead of users in distance, in the neighboring regions. We propose a new region management scheme based on sub-regions to handle interactions between users in the neighboring regions in a more scalable manner. Regions are divided into sub-regions based on users, level of interest in the neighboring regions. The region manager determines how much activities in the neighboring regions should be exposed depending on which sub-region users belong to. Each sub-region uses a different multicast address according to its users’ interests in the neighboring regions. This enables the users of a given region not to receive all the update messages from the users of the neighboring regions. This allows DVE systems to support, in a scalable manner, inter-region interactions as well as intra-region interactions. In addition, our scheme provides a dynamically adaptable scoping technique of the subregions useful when users crowd on a boundary area. It distributes to the other subregion the burden of exchange a large amount of messages by reducing the scope of the subregion where users are overcrowded. This reduces the number of messages and thus enhances scalability. We have done a performan...