This thesis project aims to explore the relationship between the players and the fictional worlds of alternate reality games (ARGs), concentrating on the aspects of immersion, player involvement and narrative. It investigates the connection between immersion and narrative, as well as to what extent the applying of narrative to physical environments contribute to the overall immersive experience of the players. The theoretical frame incorporates different aspects of game interaction, concerning game boundaries, game mastering and player experience, and includes an analytical presentation of a number of ARGs, challenging the traditional norms of game design. The theoretical framework is accompanied by a design process exploring game mechanics and player involvement through game testing. The assumptions drawn from the research, in combination with the outcome of the design process, suggest that because narrative utilized within ARGs is interactive it differs massively from traditional narration and the fact that it intersects the physical environment gives it properties that urges its users to dynamically collaborate to unfold its discourse.