This book constitutes the refereed proceedings of the Third International Conference on Interactive Digital Storytelling, ICIDS 2010, held in Edinburgh, UK, in November 2010. The book includes 3 keynotes, 25 full and short papers, 11 posters, 4 demonstration papers, 6 workshop papers, and 1 tutorial. The full and short papers have been organized into the following topical sections: characters and decision making; story evaluation and analysis; story generation; arts and humanities; narrative theories and modelling; systems; and applications.