To date, the best treatment regimens for a wide range of psychological disorders have been found to be Cognitive Behavior Therapy (CBT). However, difficulties arise with various components of CBT, for example, lack of therapist control and loss of confidentiality in the exposure component. Virtual Reality CBT (VRCBT) is a new and effective technology that overcomes these difficulties. VRCBT has been used in therapy for various psychological disorders (phobias, eating disorders, sexual dysfunction, etc.) with promising results. In addition, new approaches in VR assisted Psychotherapy and Psychotherapy training are also being developed. This chapter presents an up to date review of these studies.