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Virtual reality (VR) is emerging as a promising tool for the diagnosis and rehabilitation of neuropsychological deficits. Here we focus on immersive VR, defined as the combination of hardware and software solutions allowing the presentation, under fully controlled conditions, of stimuli in a three-dimensional (3D) 360° space, to stimulate various sensory modalities and different sectors of space ( e.g., peripersonal space, extrapersonal space) in an embodied first-person perspective. By reviewing available scientific evidence, we highlight the potential of immersive VR-based solutions in the assessment and treatment of body perception and body representation disorders in neuropsychological, neuropsychiatric and amputee patients. In addition, we present use cases of immersive VR applications for higher-order cognitive functions, such as attention, memory and executive functions. We discuss how the possibility of simulating real-life scenarios in fully controlled digital environments, in conjunction with gamified therapeutic tasks, offers a novel chance to increase the adherence and dose of neuropsychological treatments, thus creating new opportunities to change the current management of patients. We conclude by discussing current challenges and by highlighting gaps that hopefully will be filled by research in the field in the coming years.