Virtual reality (VR) is an immersive technology capable of creating a powerful, perceptual illusion of being present in a virtual environment. VR technology has been used in cognitive behavior therapy since the 1990s and accumulated an impressive evidence base, yet with the recent release of consumer VR platforms came a true paradigm shift in the capabilities and scalability of VR for mental health. This narrative review summarizes the past, present, and future of the field, including milestone studies and discussions on the clinical potential of alternative embodiment, gamification, avatar therapists, virtual gatherings, immersive storytelling, and more. Although the future is hard to predict, clinical VR has and will continue to be inherently intertwined with what are now rapid developments in technology, presenting both challenges and exciting opportunities to do what is not possible in the real world.