Objective: This research aimed to determine the efficacy of VR therapy in mitigating symptoms of depression, anxiety, and stress among older adults following arthroplasty surgery and to comprehend the influence of psychological improvement on changes in functional outcomes. Methods: Utilizing a parallel-group randomized controlled trial design, the study involved 68 osteoarthritis patients who had recently undergone either total hip or knee arthroplasty. Subjects were split into two groups. The experimental group underwent eight VR therapy sessions during their rehabilitation, while the control group was given standard care. Assessments encompassed both psychological and functional outcomes, with tools like the Hospital Anxiety and Depression Scale, Perceived Stress Scale, and the Barthel Index, among others. The experimental group showcased notable enhancements in both psychological and functional areas compared to the control group. Results: A significant (p value of < 0.001) relationship was found between psychological progress and functional recovery, indicating that psychological factors can serve as predictors for functional outcomes. Conclusions: The findings emphasize the promising role of VR therapy as a beneficial addition to the rehabilitation process for older adults’ post-hip and knee arthroplasty. The integration of psychological interventions in standard rehabilitation practices appears valuable, but further studies are needed to ascertain the long-term advantages of such an approach.