The teaching of sustainable materials in industrial design lacks opportunities for students to observe and interact with materials. This study developed a virtual reality (VR) teaching system for sustainable materials based on the theory of situated learning. We utilized the spatial and temporal dimensions in VR to show the entire process of sustainable materials from growth to degradation during the product life cycle. Students were given the opportunity to interact with the material directly. This study investigated how situated learning theory can be translated into immersive experiences about sustainable materials. The objective of this study was to analyze pedagogical approaches to maximize the effectiveness of teaching and learning in VR. The impact of the system on the user’s understanding of the use of materials in product design was also investigated. Questionnaire scales were designed to examine the effect of using the system on the dimensions of Perceived Usefulness (PU), Perceived Ease of Use (PEOU), Self-Efficacy (SE), and Perceived Playfulness (PP). These findings suggest that utilizing VR and situated learning theory as a medium can help raise awareness of the use of sustainable materials in product design.