Manufacturing industry is involved with ever increasing global competition and requirements. Production systems must be improved to increase efficiency and environmental sustainability. A competitive manufacturing sector is vital for Europe to achieve its ambitious long-term economic, social and environmental targets and to promote innovation in manufacturing. One specific and widely studied approach to enhance production systems and environments is participatory design. The primary goal of participatory design is to gain better knowledge about the production system and environment being considered in the design process by involving different personnel from, for example, design, production, maintenance, safety or management in this process. This can be done, for example, by visualising the target system and its functions and effects and by sharing the knowledge between all participants. The outcome of the design process may result in better quality of design according to the requirements, a more effective design and manufacturing process, and an increased added-value for the company, workers, and customers. One major effect of implementing a participatory design approach is the involvement of workers and their commitment to the design outcomes. However participatory design needs efficient tools. Virtual Environment (VE) and other visualisation technologies have successfully been applied in participatory design. Visualisation technologies used in participatory design have several possible implementation levels ranging from simple tools describing reality to complex VE systems. Several concepts have been presented to describe these different levels of implementation. For the purpose of this study the concepts of interest are Augmented Reality (AR) and Virtual Environments (VEs). AR technologies afford the capability to visualise virtual phenomena by adding information to the view of the real environment. VE technologies provide tools for a user to be immersed into the digital model of a real environment. The technologies were applied separately in the participatory design process due to the differences between them. There could be a great potential to integrate these methods so that they can be used concurrently in participatory design. This paper presents work that was completed at VTT Technical Research Centre of Finland. A participatory approach and applications of both VE and AR technologies were implemented in industrial cases. The purpose of the work was to improve production systems and the production environment.