Virtual reality (VR) is a promising and cost-effective tool that has the potential to reduce the prevalence of falls and locomotor impairments in older adults. However, we believe that existing VR-based approaches to prevent falls do not mimic the full breadth of perceptual, cognitive, and motor demands that older adults encounter in daily life. Researchers have not yet fully leveraged VR to address affective factors related to fall risk, and how stressors such as anxiety influence older adult balance and real-world falls. In this perspective paper, we propose developing VR-based tools that replicate the affective demands of real-world falls (eg, crossing the street) to enhance fall prevention diagnostics and interventions by capturing the underlying processes that influence everyday mobility. An effort to replicate realistic scenarios that precipitate falls in VR environments will inform evidence-based diagnostics and individualize interventions in a way that could reduce falls in older adults in daily life.