The creation of lifelike believable characters is emerging as the central focus of next-generation game development and is viewed as critical to obtaining true mass-market appeal. Visually-realistic movement in complex physics driven worlds is an increasingly critical component in creating believable characters. The demo is based on our extension to the Unreal 3 engine (UE3) and runs on advanced PCs, the Xbox 360 and PlayStation 3 (PS3) and shows advance navigation behaviors such as dynamic obstacle avoidance, local dynamic path finding and advanced obstacle traversal such as vaulting. A typical first-person shooter (FPS) game level (an underground subway system) is constructed out of physics-simulated objects; the benches and garbage cans can be displaced by gun fire and the pillars and railings can be destroyed by grenades. This allows the player to quickly and significantly disrupt the world making it extremely difficult for the non-player characters (NPCs) to navigate towards the player. NPCs can be given specific movement abilities so that some NPCs can avoid obstacles by circumventing them while more advanced NPCs can vault over them. Upon discovery of blocked passageways such as staircases, NPCs can take alternative routes.