Increasingly, first-year engineering curricula incorporate design projects. However, the faculty and staff effort and physical resources required for the number of students enrolled can be daunting and affect the quality of instruction. To reduce these costs, ensure a high quality educational experience, and reduce variability in student outcomes that occur with individual design projects, we developed a simulation of engineering professional practice, NephroTex, in which teams of students are guided through multiple design-build-test cycles by a mentor in a virtual internship. Here we report on the design process for the virtual internship and results of testing with first-year engineering students at a large, public university. Our results demonstrate that the novel virtual internship successfully educated and motivated first-year-engineering students. Importantly, the virtual environment captures rich discourse that can be used to assess the process of student learning with tools from existing learning theory.