Controlled studies by groups throughout the world have proven the efficacy of virtual reality (VR) exposure for “mental rehabilitation,” including treatment of Specific Phobias (SP), Social Phobia (SoP), and Panic Disorder with Agoraphobia (PDA). In addition, many are now showing the power of adding VR to protocols to treat individuals with Posttraumatic Stress Disorder (PTSD) as well as to prevent PTSD by “inoculating” individuals against stressful situations they may encounter (Stress Inoculation Training). Others have shown how VR can be added to protocols for those needing “physical rehabilitation” to improve patient compliance and outcomes. In addition, studies have shown the addition of physiological monitoring and feedback to the VR protocol can have added benefit, both in terms of short term effectiveness and in terms of lowering recidivism in the long term. VR allows stimuli to be presented in a systematic, controlled fashion, and physiology provides objective evidence of when the stimuli are eliciting appropriate responses in the patient or trainee. This enables treatment and training to be individualized, focusing in on those specific parts of the experience which cause the individual the most difficulty. By combining such measures as subjective ratings, physiological data, personality type, and self-report questionnaire scores, with expert clinical observations; it is possible to further refine and improve clinical and research-based protocols. Decades after the first simulators were used to train fighter pilots, advanced technologies and simulations are now impacting military medicine. This paper highlights illustrative studies to introduce the reader to this area.