In various embodiments, computerized methods and systems for dynamically updating a fully-immersive virtual environment based on tracked physical environment data. A computing device coupled to a HMD receives sensor data from a variety of sensors. The computing device can generate a virtual scene based on the received sensor data, whereby the virtual scene includes at least a portion of a virtual path that corresponds to at least a portion of a navigable path determined based on the received sensor data. The computing device can modify the virtual scene include a virtual obstruction that corresponds to a physical object detected based on additional sensor data received from the sensors. The modified virtual scene is presented to the user for display, so that the user can safely traverse the physical environment while staying fully-immersed in the virtual environment.