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This special issue presents research in innovative aspects of intelligent interactive entertainment (IE) that haven't seen much publication yet. AI researchers find IE interesting because it requires systems that think, behave, and interact the way that real people do. An invited article discusses the challenges, important trends, and future directions for intelligent IE. The other selected articles deal with a variety of topics: generating nonrepetitive behavior of nonplayer characters in video games; 3D virtual characters using speech, posture, pointing, and involuntary movements to interact with 2D presentations; applying a movie set metaphor to manage multiple software agents in dynamic scenarios; using spatial and temporal coherence as constraints for defining synchronization of actions and turn-taking in location-based games; adding humorous one-liners to text-based applications; and a user interface in which objects react and adapt to the user's focus of attention. This article is part of a special issue on interactive entertainment.