In this mixed-method study, we investigated the impact and design of a multiuser, virtual reality (VR) supported teaching simulation, in comparison with live classroom teaching simulation, on the participatory training of teaching and the teaching knowledge development of student instructors. A total of 40 university teaching assistants participated in a 4-h training session in which they were randomly assigned to a VR simulation or a live classroom simulation condition. The study indicated that the VR simulation better promoted the lab-teaching knowledge development than the live simulation, whereas the latter better fostered class-teaching knowledge development. All participants reported higher teaching self-efficacy after the training. The qualitative data indicated that domain-specific challenges and authentic environmental prompting in the VR simulation fostered both experiential and vicarious learning of teaching. However, VR participants lacked mutual engagement in collaborative role-playing. The study findings suggest that VR-based simulation can supplement and work as an alternative to the live classroom simulation to host participatory teaching development.