Mirror therapy (MT) has been proposed as an essential component of upper limb neuro-rehabilitation, using mirror illusion of the unaffected hand movement and superimposing it on the affected hand to improve neuroplasticity for improving motor recovery in stroke patients. In this paper, we developed a virtual reality mirror therapy (VRMT) system, and examined the performance of the proposed VRMT system. The VRMT system consists of a motion-tracking device, a VR goggle, and a VRMT software. Young, healthy participants, and stroke patients with mild-to-severe hemiparesis were recruited in this study, to validate the effectiveness of the proposed VRMT system. Experimental results based on the pinch-holding-up activity (PHUA) test revealed a significant effect on the precision pinch performance of young-healthy participants receiving VRMT, whereas traditional MT could not improve the precision pinch performance in young-healthy participants (Wilcoxon signed-rank test, Z = -2.693, = 0.007). For patients having suffered a stroke and being treated with VRMT, significant beneficial effects examined by mixed effect model were found on the total score of FMA ( = 0.033) and hand part of FMA ( = 0.008). The findings in this study indicate that the VRMT system has a potentially positive effects on the sensorimotor performance of hands in healthy participants. In addition, add-on effect of VR to MT provides beneficial effects on motor function of the upper extremity in chronic stroke patients.