ObjectiveImmersive virtual reality (VR) and augmented reality (AR) have the potential to improve the treatment and diagnosis of individuals experiencing psychosis. Although commonly used in creative industries, emerging evidence reveals that VR is a valuable tool to potentially improve clinical outcomes, including medication adherence, motivation, and rehabilitation. However, the efficacy and future directions of this novel intervention require further study. The aim of this review is to search for evidence of efficacy in enhancing existing psychosis treatment and diagnosis with AR/VR.Methods2069 studies involving AR/VR as a diagnostic and treatment option were reviewed via PRISMA guidelines in five databases: PubMed, PsychInfo, Embase, and CINAHL.ResultsOf the initial 2069 articles, 23 original articles were eligible for inclusion. One study applied VR to the diagnosis of schizophrenia. Most studies demonstrated that the addition of VR therapies and rehabilitation methods to treatment-as-usual (medication, psychotherapy, social skills training) was more effective than traditional methods alone in treating psychosis disorders. Studies also support the feasibility, safety, and acceptability of VR to patients. No articles using AR as a diagnostic or treatment option were found.ConclusionsVR is efficacious in diagnosing and treating individuals experiencing psychosis and is a valuable augmentation of evidence-based treatments.Supplementary InformationThe online version contains supplementary material available at 10.1007/s40501-023-00287-5.