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Virtual Reality (VR) provides a unique medium suited to the achievement of several requirements for effective rehabilitation intervention. Specifically, therapy can be provided within a functional, purposeful and motivating context. Many VR applications present opportunities for individuals to participate in experiences, which are engaging and rewarding. In addition to the value of the rehabilitation experience for the user, both therapists and users benefit from the ability to readily grade and document the therapeutic intervention using various systems. In VR, advanced technologies are used to produce simulated, interactive and multi-dimensional environments. Visual interfaces including desktop monitors and head-mounted displays (HMDs), haptic interfaces, and real-time motion tracking devices are used to create environments allowing users to interact with images and virtual objects in real-time through multiple sensory modalities. Opportunities for object manipulation and body movement through virtual space provide frameworks that, in varying degrees, are perceived as comparable to similar opportunities in the real world. This paper reviews current work on motor rehabilitation using virtual environments and virtual reality and where possible, compares outcomes with those achieved in real-world applications.