This paper discussed a distributed processing architecture for a virtual space teleconferencing system. Virtual space teleconferencing is a promising application field for networked virtual environments. People in different places will be able to meet each other in a virtual teleconferencing room and proceed with various cooperative tasks. When such a system creates a realistic virtual environment, it can be referred to as a "Teleconferencing with realistic sensations" system. Further more, as the conference environment can be shared by a number of users, it is possible to perform various kinds of cooperative work using the system. In this paper, the architecture for networked multi-user virtual space systems are classified, and then a case study is described for building a proposed teleconferencing system. The system reproduces a 3D image of each conference participant in a virtual meeting room. Compared with the former system, the new system can deal with more than three participants at the same time and can connect them through commercial telephone lines. Based on the virtual world database management structure, the system was classified as a central server system. However, a central server architecture limits the number of conference sites. We confirmed that the system can serve up to 14 sites using multi-modal interaction without significant latency in operation from summational experiments. Then, introducing some assumptions to the results, we have proposed processing model of the system. The results of model could describe the experimental results and we could indicate roughy estimated system capacity to realize a requaied system performance.