The aim of this paper are threefold: it explores methods for the detection of affective states in text, it presents the usage of such affective cues in a conversational system and it evaluates its effectiveness in a virtual reality setting. Valence and arousal values, used for generating facial expressions of users’ avatars, are also incorporated into the dialog, helping to bridge the gap between textual and visual modalities. The system is evaluated in terms of its ability to: i) generate a realistic dialog, ii) create an enjoyable chatting experience, and iii) establish an emotional connection with participants. Results show that user ratings for the conversational agent match those obtained in a Wizard of Oz setting