This paper presents a flexible, scalable framework for interactive hands-on shape design in a haptic, stereoscopic virtual environment. The framework is founded upon the concept of PDE-based geometric surface flow. Given an input polygonal mesh, a user can interactively define implicit functions around regions of interest of the mesh model, and the locally or globally affected regions of the model will automatically deform according to the underlying partial differential equations and reconstruct the implicitly defined shape. During the model deformation process, the model can always maintain its regularity and can properly modify its topology when collisions between different parts of the model occur. With augmented haptics functionality and stereoscopic display, our system provides a more intuitive interface, which allows users to directly manipulate 3D polygonal objects with hands.