A researcher posing as a 13-year-old girl witnessed grooming, sexual material, racist insults and a rape threat in the virtual-reality world.
The children's charity said it was "shocked and angry" at the findings.
Head of online child safety policy Andy Burrows added the investigation had found "a toxic combination of risks".
The BBC News researcher - using an app with a minimum age rating of 13 - visited virtual-reality rooms where avatars were simulating sex. She was shown sex toys and condoms, and approached by numerous adult men.