Virtual reality (VR) has experienced a remarkable evolution over recent decades, evolving from its initial applications in specific military domains to becoming a ubiquitous and easily accessible technology. This thorough review delves into the intricate domain of VR within healthcare, seeking to offer a comprehensive understanding of its historical evolution, theoretical foundations, and current adoption status. The examination explores the advantages of VR in enhancing the educational experience for medical students, with a particular focus on skill acquisition and retention. Within this exploration, the review dissects the applications of VR across diverse medical disciplines, highlighting its role in surgical training and anatomy/physiology education. While navigating the expansive landscape of VR, the review addresses challenges related to technology and pedagogy, providing insights into overcoming technical hurdles and seamlessly integrating VR into healthcare practices. Additionally, the review looks ahead to future directions and emerging trends, examining the potential impact of technological advancements and innovative applications in healthcare. This review illuminates the transformative potential of VR as a tool poised to revolutionize healthcare practices.