Disclosed are systems and methods for rule-based procedural generation of terrain in real time for a virtual world. By describing the terrain with rules rather than storing the actual geometry data, a drastic savings in terms of memory and disk space is achieved by generating terrain procedurally on the fly in real time when it is necessary. Using the terrain editor tool, the terrain system allows defining and modifying the terrain height, color, shaders, textures, flora, and environment, for example. Additionally, generating the terrain procedurally allows for almost limitless detail by changing the parameters used to create the terrain geometry. These rules can also be added and removed dynamically, leading to terrain modification in real time. In addition, resources are managed for the terrain generation system, such as allocating memory for areas of virtual terrain; associating a priority level to each virtual terrain for memory management; and deallocating memory of the virtual terrain based at least in part on the priority levels of the areas of virtual terrain.