diff --git a/components/nif/effect.cpp b/components/nif/effect.cpp
index 79cd10431..7947e301d 100644
--- a/components/nif/effect.cpp
+++ b/components/nif/effect.cpp
@@ -19,14 +19,20 @@ void NiTextureEffect::read(NIFStream *nif)
 {
     NiDynamicEffect::read(nif);
 
-    /*
-           3 x Vector4 = [1,0,0,0]
-           int = 2
-           int = 0 or 3
-           int = 2
-           int = 2
-        */
-    nif->skip(16*4);
+    // Model Projection Matrix
+    nif->skip(3 * 3 * sizeof(float));
+
+    // Model Projection Transform
+    nif->skip(3 * sizeof(float));
+
+    // Texture Filtering
+    nif->skip(4);
+
+    clamp = nif->getUInt();
+
+    textureType = (TextureType)nif->getUInt();
+
+    coordGenType = (CoordGenType)nif->getUInt();
 
     texture.read(nif);
 
diff --git a/components/nif/effect.hpp b/components/nif/effect.hpp
index 02647e444..015809a68 100644
--- a/components/nif/effect.hpp
+++ b/components/nif/effect.hpp
@@ -70,6 +70,26 @@ struct NiSpotLight : public NiPointLight
 struct NiTextureEffect : NiDynamicEffect
 {
     NiSourceTexturePtr texture;
+    unsigned int clamp;
+
+    enum TextureType
+    {
+        Projected_Light = 0,
+        Projected_Shadow = 1,
+        Environment_Map = 2,
+        Fog_Map = 3
+    };
+    TextureType textureType;
+
+    enum CoordGenType
+    {
+        World_Parallel = 0,
+        World_Perspective,
+        Sphere_Map,
+        Specular_Cube_Map,
+        Diffuse_Cube_Map
+    };
+    CoordGenType coordGenType;
 
     void read(NIFStream *nif);
     void post(NIFFile *nif);
diff --git a/components/nifosg/nifloader.cpp b/components/nifosg/nifloader.cpp
index 975d6d6e0..53a0cdc19 100644
--- a/components/nifosg/nifloader.cpp
+++ b/components/nifosg/nifloader.cpp
@@ -6,6 +6,7 @@
 #include <osg/Geometry>
 #include <osg/Array>
 #include <osg/LOD>
+#include <osg/TexGen>
 
 // resource
 #include <components/misc/stringops.hpp>
@@ -36,6 +37,7 @@
 #include <osg/TexEnvCombine>
 
 #include <components/nif/node.hpp>
+#include <components/nif/effect.hpp>
 #include <components/sceneutil/util.hpp>
 #include <components/sceneutil/skeleton.hpp>
 #include <components/sceneutil/riggeometry.hpp>
@@ -439,6 +441,81 @@ namespace NifOsg
             return lod;
         }
 
+        osg::ref_ptr<osg::Image> handleSourceTexture(const Nif::NiSourceTexture* st, Resource::ImageManager* imageManager)
+        {
+            if (!st)
+                return NULL;
+
+            osg::ref_ptr<osg::Image> image;
+            if (!st->external && !st->data.empty())
+            {
+                image = handleInternalTexture(st->data.getPtr());
+            }
+            else
+            {
+                std::string filename = Misc::ResourceHelpers::correctTexturePath(st->filename, imageManager->getVFS());
+                image = imageManager->getImage(filename);
+            }
+            return image;
+        }
+
+        void handleEffect(const Nif::Node* nifNode, osg::Node* node, Resource::ImageManager* imageManager)
+        {
+            if (nifNode->recType != Nif::RC_NiTextureEffect)
+            {
+                std::cerr << "Unhandled effect " << nifNode->recName << " in " << mFilename << std::endl;
+                return;
+            }
+
+            const Nif::NiTextureEffect* textureEffect = static_cast<const Nif::NiTextureEffect*>(nifNode);
+            if (textureEffect->textureType != Nif::NiTextureEffect::Environment_Map)
+            {
+                std::cerr << "Unhandled NiTextureEffect type " << textureEffect->textureType << std::endl;
+                return;
+            }
+
+            osg::ref_ptr<osg::TexGen> texGen (new osg::TexGen);
+            switch (textureEffect->coordGenType)
+            {
+            case Nif::NiTextureEffect::World_Parallel:
+                texGen->setMode(osg::TexGen::OBJECT_LINEAR);
+                break;
+            case Nif::NiTextureEffect::World_Perspective:
+                texGen->setMode(osg::TexGen::EYE_LINEAR);
+                break;
+            case Nif::NiTextureEffect::Sphere_Map:
+                texGen->setMode(osg::TexGen::SPHERE_MAP);
+                break;
+            default:
+                std::cerr << "Unhandled NiTextureEffect coordGenType " << textureEffect->coordGenType << std::endl;
+                return;
+            }
+
+            osg::ref_ptr<osg::Texture2D> texture2d (new osg::Texture2D(handleSourceTexture(textureEffect->texture.getPtr(), imageManager)));
+            texture2d->setName("envMap");
+            unsigned int clamp = static_cast<unsigned int>(textureEffect->clamp);
+            int wrapT = (clamp) & 0x1;
+            int wrapS = (clamp >> 1) & 0x1;
+            texture2d->setWrap(osg::Texture::WRAP_S, wrapS ? osg::Texture::REPEAT : osg::Texture::CLAMP);
+            texture2d->setWrap(osg::Texture::WRAP_T, wrapT ? osg::Texture::REPEAT : osg::Texture::CLAMP);
+
+            osg::ref_ptr<osg::TexEnvCombine> texEnv = new osg::TexEnvCombine;
+            texEnv->setCombine_Alpha(osg::TexEnvCombine::REPLACE);
+            texEnv->setSource0_Alpha(osg::TexEnvCombine::PREVIOUS);
+            texEnv->setCombine_RGB(osg::TexEnvCombine::ADD);
+            texEnv->setSource0_RGB(osg::TexEnvCombine::PREVIOUS);
+            texEnv->setSource1_RGB(osg::TexEnvCombine::TEXTURE);
+
+            int texUnit = 3; // FIXME
+
+            osg::StateSet* stateset = node->getOrCreateStateSet();
+            stateset->setTextureAttributeAndModes(texUnit, texture2d, osg::StateAttribute::ON);
+            stateset->setTextureAttributeAndModes(texUnit, texGen, osg::StateAttribute::ON);
+            stateset->setTextureAttributeAndModes(texUnit, texEnv, osg::StateAttribute::ON);
+
+            stateset->addUniform(new osg::Uniform("envMapColor", osg::Vec4f(1,1,1,1)));
+        }
+
         osg::ref_ptr<osg::Node> handleNode(const Nif::Node* nifNode, osg::Group* parentNode, Resource::ImageManager* imageManager,
                                 std::vector<int> boundTextures, int animflags, int particleflags, bool skipMeshes, TextKeyMap* textKeys, osg::Node* rootNode=NULL)
         {
@@ -582,13 +659,18 @@ namespace NifOsg
             const Nif::NiNode *ninode = dynamic_cast<const Nif::NiNode*>(nifNode);
             if(ninode)
             {
+                const Nif::NodeList &effects = ninode->effects;
+                for (size_t i = 0; i < effects.length(); ++i)
+                {
+                    if (!effects[i].empty())
+                        handleEffect(effects[i].getPtr(), node, imageManager);
+                }
+
                 const Nif::NodeList &children = ninode->children;
                 for(size_t i = 0;i < children.length();++i)
                 {
                     if(!children[i].empty())
-                    {
                         handleNode(children[i].getPtr(), node, imageManager, boundTextures, animflags, particleflags, skipMeshes, textKeys, rootNode);
-                    }
                 }
             }
 
@@ -707,8 +789,7 @@ namespace NifOsg
                             wrapT = inherit->getWrap(osg::Texture2D::WRAP_T);
                         }
 
-                        std::string filename = Misc::ResourceHelpers::correctTexturePath(st->filename, imageManager->getVFS());
-                        osg::ref_ptr<osg::Texture2D> texture (new osg::Texture2D(imageManager->getImage(filename)));
+                        osg::ref_ptr<osg::Texture2D> texture (new osg::Texture2D(handleSourceTexture(st.getPtr(), imageManager)));
                         texture->setWrap(osg::Texture::WRAP_S, wrapS);
                         texture->setWrap(osg::Texture::WRAP_T, wrapT);
                         textures.push_back(texture);
@@ -1318,17 +1399,8 @@ namespace NifOsg
                         std::cerr << "Warning: texture layer " << i << " is in use but empty in " << mFilename << std::endl;
                         continue;
                     }
-                    osg::ref_ptr<osg::Image> image;
                     const Nif::NiSourceTexture *st = tex.texture.getPtr();
-                    if (!st->external && !st->data.empty())
-                    {
-                        image = handleInternalTexture(st->data.getPtr());
-                    }
-                    else
-                    {
-                        std::string filename = Misc::ResourceHelpers::correctTexturePath(st->filename, imageManager->getVFS());
-                        image = imageManager->getImage(filename);
-                    }
+                    osg::ref_ptr<osg::Image> image = handleSourceTexture(st, imageManager);
 
                     unsigned int clamp = static_cast<unsigned int>(tex.clamp);
                     int wrapT = (clamp) & 0x1;