Avatar-based virtual reality (VR) is becoming more prevalent in industry and educational settings. There is, however, limited research on the extent to which gender stereotypes are present in this environment. The university laboratory study presented in this paper was conducted in a VR environment with participants who were randomly assigned to male or female avatars and instructed to negotiate the role of a manager or member of staff. The results reveal differences in satisfaction regarding their roles and gender. Participants who embodied a female avatar were less happy when they were subordinates interacting with a male avatar, compared to participants embodying a male avatar in the staff role (interacting with a female avatar). Male avatars with staff roles were also more content with their avatar than male avatars with manager roles and also reported being more comfortable in the VR experience. Relevant for diversity management when integrating VR in education and business, the results are discussed in regard to self-similarity and social identity dynamics and provide insight into understanding the extent to which gender stereotypes may be present in avatar-based VR.