She has worked for Atari, co-founded the game development studio Purple Moon, and served as an interaction design consultant for multiple companies including Sony Pictures, Apple, and Citibank.

[3] Her Ph.D. dissertation was published in 1986, titled "Toward the Design of a Computer-Based Interactive Fantasy System", and would form the basis of her 1991 book "Computers as Theater".

She posited that while the early video game industry focused almost exclusively upon developing products aimed at young men, girls were not inherently disinterested in the medium.

Her research suggested that young women tended to prefer experiences based around complex social interaction, verbal skills, and transmedia.

[16][17][18] In Laurel's work regarding interface design, she is well known for her support of the theory of interactivity, the "degree to which users of a medium can influence the form or content of the mediated environment.

[21] Placeholder was the first VR project to separate gaze from direction of movement, allow for two hands to participate, support two player games, and use imagery from natural landscape.

[4] The installation allowed multiple people to construct a narrative by attaching movement trackers to its subjects' bodies while letting them navigate a virtual environment by doing common physical acts with special results, such as flapping one's arms to fly.

[22] "Tech Work by Heart" in Women, Technology, Art, edited by Judy Malloy, is an early essay explaining the origins of Purple Moon.