Behavioral therapy techniques for treating phobias often includes graded exposure of the patient to anxiety-producing stimuli (Systematic Desensitization). However, in utilizing systematic desensitization, research reviews demonstrate that many patients appear to have difficulty imaging the prescribed anxiety-evoking scene. They also express strong aversion to experiencing real situations. This chapter describes the Virtual Reality Therapy (VRT), a new therapeutical approach that can be used to overcome some of the difficulties inherent in the traditional treatment of phobias. VRT, like current imaginal and in vivo modalities, can generate stimuli that could be utilized in desensitization therapy. Like systematic desensitization therapy, VRT can provide stimuli for patients who have difficulty in imagining scenes and/or are too phobic to experience real situations. Unlike in vivo systematic desensitization, VRT can be performed within the privacy of a room, thus avoiding public embarrassment and violation of patient confidentiality. VRT can generate stimuli of much greater magnitude than standard in vivo techniques. Since VRT is under patient control, it appears safer than in vivo desensitization and at the same time more realistic than imaginal desensitization. Finally, VRT adds the advantage of greater efficiency and economy in delivering the equivalent of in vivo systematic desensitization within the therapist's office. The chapter also describes how to use virtual reality in the treatment of specific phobias: fear of flying, fear of heights, fear of being in certain situations (such as a dark barn, an enclosed bridge over a river, and in the presence of an animal [a black cat] in a dark room), and fear of public speaking.