The primary purpose of this study was to investigate the effectiveness of virtual environment technology in the area of psychotherapy. In particular, this study investigated the effectiveness of virtual environment desensitization (VED) in the treatment of agoraphobia (fear of being in places or situations from which escape might be difficult or embarrassing). Sixty undergraduate college students served as subjects. Thirty subjects served in the experimental group and the other 30 served as a control group. Subjects' degree of fear/anxiety was measured using two instruments, the Attitude Towards Agoraphobia Questionnaire (ATAQ) and the Subjective Units of Discomfort Scale (SUDS). Only subjects in the experimental group were exposed to the VED treatment. The scores of the control group did not change significantly, while both ATAQ and SUDS scores decreased significantly for the experimental group. The average SUDS scores of the experimental group decreased steadily across sessions, indicating steady improvement with treatment. It is hoped that this research will be a first step toward the utilization of virtual environment technology in providing more effective, economical, and confidential treatment of psychological disorders.