This in-depth research investigates the transformational potential of generative artificial intelligence (AI) in virtual reality (VR) by methodically examining 26 papers obtained through advanced search techniques on the Scopus and JSTOR databases using the keywords "Artificial Intelligence" and "Virtual Reality." The study focuses on three major themes: immersive settings, content generation, and user interaction. Our findings show that generative AI improves VR by creating more realistic and dynamic immersive worlds, automating and personalizing content generation, and boosting user engagement with adaptive and intelligent systems. This combination of generative AI and VR promises to make substantial advances in a variety of industries, including gaming, education, training, and treatment, by creating more engaging and interactive experiences.