The emergence and popularity of virtual property has challenged traditional legal theory, especially property and intellectual property theory. Due to the predisposition for a desire of ownership, and the desire for security and certainty in investment, virtual property users should acquire new specific legal protection for their virtual property. This thesis argues that it is needed to establish an independent virtual property theory which could clarify the legal status of virtual property, the types of virtual property right and the allocation of ownership of virtual property in the virtual world. The majority of the current virtual property theories tend to confuse different types of code and content in virtual worlds, equating the underlying software (the building blocks of virtual worlds) and the user generated content (virtual assets). In this sense, this thesis proposes to construct a notion of virtual property through layer theory. The layer theory divides virtual property into three layers, namely infrastructure layer (1), abstraction layer (2) and content layer (3), based on distinguishing between codes which constitute a platform of the virtual world and codes which consist of the user generated content. The infrastructure layer (1) contains the internet service provides’ ISPs’ codes which constitute the platform of the virtual world. This level of virtual property could be considered as the fundamental basis of the operation of the virtual world. At the abstraction layer (2) sits the unique computer code which comprise of the unique items which designed by ISPs but have not transmitted to users in the virtual world. The content layer (3) are the virtual items which are closely relevant to specific individual due to their personal investment and arrangements. Virtual items that sit at the infrastructure layer (1) and abstraction layer (2) should be categorised as ISPs’ virtual property and should be protected as computer software or artistic works created by writing program under current copyright framework. The programmers’ employed by the ISPs are the author of both categorises of virtual property and the ISPs are the first owner of both types of virtual property. However once virtual property combines users’ skill, labour, personal information and other types of investment and arrangement, the added part then should be categorised as users’ virtual property and the ownership should be granted to ordinary users. Theoretically, this thesis defines virtual property as a piece of property which relies on the internet environment provided by ISPs and reflects both the legal relationship between users and ISPs and the relationship between users and others. This thesis also divides virtual property into three categories, the virtual property users get from ISPs directly without further reproduction and creation, the virtual property that contains users’ private information, and the virtual property enrich users’ originality and reproduction which even have not reach the requirement of copyright. Compared with the traditional property right model, taking the complex relationships reflected by virtual property, this thesis argues that virtual property rights granted to users should be a twofold virtual property right. The twofold virtual property rights system adopts what I term ‘restrained-exclusive property rights’ or ‘fundamental property rights’ to describe the ‘rights’ users can claim to regulate the relationship and conflict between them and ISPs, meanwhile ‘relative-exclusive property rights’ or ‘external property rights’ are used to describe owners’ property interests to prevent the infringement from other users. The twofold virtual property rights system will help courts to recognise the exclusive aspect of users’ virtual property right, clarify the property interest over users’ private information, and identify the originality in users’ virtual property. From the legislative perspective, this thesis suggests that virtual property should be explicitly stipulated in the current copyright framework in the UK due to the characteristic of the virtual property. As the ‘Copyright, Designs and Patents Act 1988’ (CDPA) states in s.1 that copyright is a property right. On the other hand, based on the virtual property theory proposed by this thesis, virtual property that sit at the infrastructure layer (1) and abstraction layer (2) should be protected as computer software or artistic works. Therefore, this thesis suggests that users’ virtual property should be regulated by an independent statute entitled ‘The Virtual Property Statute’ which will complement the current CDPA 1988.