Intercultural dialogue is an essential component of intercultural citizenship, i.e., students' ability to address complex societal issues. With more interconnected problems comes an increased need for students to communicate and collaborate with people from differing backgrounds. This pilot study combined the framework of Intercultural Citizenship (ICit), and the United Nations' Sustainable Development Goals (UN SDGs) related to the environment with Virtual Reality (VR) and Virtual Exchange (VE) to investigate the students' application of ICit. Fifteen learners of German, consisting of university students of German in the United States and international students studying at a German university, met in dyads or triads in VR over six weeks and worked on independent projects, each focusing on a societal environmental issue of their choice. Analyses of the data (pre-project and postproject surveys, weekly journal entries, project presentations) revealed that participants applied their intercultural competence. Some students showed a shift of emphasis: While at the beginning they were more concerned with linguistic elements of the German language they were focused on the topic of their project toward the end of the project. Finally, participants appreciated the VR setting for building relationships, communicating, and applying intercultural competence in an authentic setting. This study underscores the potential of advancing ICit and intercultural communicative competence through a VR-VE format, emphasizing VR-VE's potential in fostering relationship-building between students. This format offers students practical experience in navigating and appreciating the complexities of intercultural communication.