Abstract: Second life is an online, 3D virtual world imagined and created by its residents. The aim of the current study is to investigate why people communicate in second life and effectiveness of communication to perform e-business in virtual environment. The most common communication media used in second life are text and voice, instant messaging and video conferencing. The intention of residents entering second Life is to interact with each other, socialize and conduct e-business. The major theoretical background used in this study was the communication theory and social systems, theory of intrinsic motivation and word of mouth communication. A case analysis from second life residents was performed to study communication behavior of residents and e-business opportunities. The result was focused on the efficiency and superiority of communication in second life among other social networking sites such as Facebook, Myspace, Twitter and Youtube and its significance on real world business. The findings provided that communication in virtual environment plays pivotal role for social networking and e-business growth.