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In this design-based case study, we explored the design and implementation of Artificial Intelligence (AI)-integrated pedagogical agents for teacher training with student instructors. We reported two iterations of an embryonic design project to illuminate lessons learned for the AI-integrated pedagogical agent design. Based on the interdisciplinary literature and empirical data, we developed a design architecture and student models that enable the infusion of AI in an open-source Virtual Reality (VR). We then conducted an exploratory study with a proof-of-concept application of the AI-integrated pedagogical agents for VR-based teacher training. Results highlighted the feasibility of using data-driven pedagogical agents in the open-source VR. Knowledge-constructive interactions and perceived realism with AI-integrated pedagogical agents were also underscored.