Virtual reality (VR) combines a high degree of control with ecological validity, and has important benefits for basic neuroscience research and therapeutic applications.VR is compatible with non-invasive imaging technologies, as well as with invasive cell recording techniques, which makes it uniquely valuable for studying brain activity during realistic situations. In recent years, researchers have developed VR systems that are compatible with animal research.VR has provided new insights into the activity of brain regions involved in spatial cognition and navigation, multisensory integration of perceptual stimulation, and social interaction.VR continues to accrue confirmatory evidence for the treatment of phobias owing to its ability to provide powerful sensory illusions within a highly controlled environment. The effects of VR on phobia treatment can be commensurate with in situ and imaginal exposure therapies, and it has been applied to the treatment of a wide range of phobias, as well as post-traumatic stress disorder.The interactivity and motivation produced by VR stimuli have proven useful for neurorehabilitation after brain injury, as well as for pain reduction.Brain–computer interface technology is rapidly improving, and VR environments are valuable for allowing patients to use neuromotor prosthetics in a safe environment.VR is likely to become more ubiquitous as equipment continues to become more robust, inexpensive and easier to use. A likely trend will be towards increased mobility, particularly the use of augmented reality for research and therapy.