We are researching a three-dimensional version of direct manipulation interface. In our prototype system “Zashiki-Warashi,” users can directly manipulate furniture and lighting to design a virtual room. In this paper, we will describe our goals for the prototype and our results. Zashiki-Warashi has three main features: 1. 1. Beam Cursor: This cursor emits a beam similar to that of a laser, with which users can easily select objects in a virtual world. 2. 2. Direct Manipulation of Environment: In Zashiki-Warashi, not only objects but also lighting and user's viewpoint can be manipulated directly. 3. 3. Gravity: In the gravitational environment of Zashiki-Warashi, solids fall naturally. Solids can be picked up, moved, and dropped in a realistic manner inside the virtual world.