There was a surge in psychological distress and emotional burnout during the COVID-19 pandemic. Virtual reality (VR) is helpful as a psychological intervention whilst maintaining physical or social distancing. The present systematic review assessed the role of VR as a psychological intervention tool for mental health problems during the COVID-19 pandemic. We conducted a systematic review that followed the Preferred Reporting Items for Systematic Reviews and Meta-Analysis (PRISMA) guidelines. This study used the search-related terms: (Virtual reality OR simulated-3D-environment OR VR) AND (covid! or corona!) AND (mental* OR psychologic* OR well* OR health*) AND (intervention) on six databases, i.e., MEDLINE, PsycINFO, Ovid Medline, EMBASE, ACM digital library, and Cochrane Central Register of Controlled Trials (CENTRAL) from the inception date until 23.6.2021. We finally included four studies in the systematic review out of the 379 references imported for screening. These studies reveal that VR is beneficial as a psychological tool for intervention in individuals with mental health problems. Immersed in the telepresence, interacting in a 3-D format compared to a 2-D layout, having a sense of enjoyment and engagement, activating an affective-motivational state, “escaping” to a virtual from the real world are pivotal faucets of VR as a psychological tool for intervention.