Virtual reality exposure therapy (VRET) is an effective cognitive-behavioral treatment for anxiety disorders that comprises systematic confrontations to virtual representations of feared stimuli and situations. However, not all patients respond to VRET, and some patients relapse after successful treatment. One explanation for this limitation of VRET is that its underlying mechanisms are not yet fully understood, leaving room for further improvement. On these grounds, the present thesis aimed to investigate two major research questions: first, it explored how virtual stimuli induce fear responses in height-fearful participants, and second, it tested if VRET outcome could be improved by incorporating techniques derived from two different theories of exposure therapy. To this end, five studies in virtual reality (VR) were conducted. Study 1 (N = 99) established a virtual environment for height exposure using a Computer Automatic Virtual Environment (CAVE) and investigated the effects of tactile wind simulation in VR. Height-fearful and non-fearful participants climbed a virtual outlook, and half of the participants received wind simulation. Results revealed that height-fearful participants showed stronger fear responses, on both a subjective and behavioral level, and that wind simulation increased subjective fear. However, adding tactile wind simulation in VR did not affect presence, the user's sense of 'being there' in the virtual environment. Replicating previous studies, fear and presence in VR were correlated, and the correlation was higher in height-fearful compared to non-fearful participants. Study 2 (N = 43) sought to corroborate the findings of the first study, using a different VR system for exposure (a head-mounted display) and measuring physiological fear responses. In addition, the effects of a visual cognitive distractor on fear in VR were investigated. Participants' fear responses were evident on both a subjective and physiological level---although much more pronounced on skin conductance than on heart rate---but the virtual distractor did not affect the strength of fear responses. In Study 3 (N = 50), the effects of trait height-fearfulness and height level on fear responses were investigated in more detail. Self-rated level of acrophobia and five different height levels in VR (1 m--20 m) were used as linear predictors of subjective and physiological indices of fear. Results showed that subjective fear and skin conductance responses were a function of both trait height-fearfulness and height level, whereas no clear effects were visible for heart rate. Study 4 (N = 64 + N = 49) aimed to advance the understanding of the relationship between presence and fear in VR. Previous research indicates a positive correlation between both measures, but possible causal mechanisms have not yet been identified. The study was the first to experimentally manipulate both presence (via the visual and auditive realism of the virtual environment) and fear (by presenting both height and control situations). Results indicated a causal effect of fear on presence, i.e., experiencing fear in a virtual environment led to a stronger sense of `being there' in the virtual environment. However, conversely, presence increased by higher scene realism did not affect fear responses. Nonetheless, presence seemed to have some effects on fear responding via another pathway, as participants whose presence levels were highest in the first safe context were also those who had the strongest fear responses in a later height situation. This finding indicated the importance of immersive user characteristics in the emergence of presence and fear in VR. The findings of the first four studies were integrated into a model of fear in VR, extending previous models and highlighting factors that lead to the emergence of both fear and presence in VR. Results of the studies showed that fear responses towards virtual heights were affected by trait height-fearfulness, phobic elements in the virtual environment, and, at least to some degree, on presence. Presence, on the other hand, was affected by experiencing fear in VR, immersion---the characteristics of the VR system---and immersive user characteristics. Of note, the manipulations of immersion used in the present thesis, visual and auditory realism of the virtual environment and tactile wind simulation, were not particularly effective in manipulating presence. Finally, Study 5 (N = 34) compared two different implementations of VRET for acrophobia to investigate mechanisms underlying its efficacy. The first implementation followed the Emotional Processing Theory, assuming that fear reduction during exposure is crucial for positive treatment outcome. In this condition, patients were asked to focus on their fear responses and on the decline of fear (habituation) during exposures. The second implementation was based on the inhibitory learning model, assuming that expectancy violation is the primary mechanism underlying exposure therapy efficacy. In this condition, patients were asked to focus on the non-occurrence of feared outcomes (e.g., 'I could fall off') during exposure. Based on predictions of the inhibitory learning model, the hypothesis for the study was that expectancy-violation-based exposure would outperform habituation-based exposure. After two treatment sessions in VR, both treatment conditions effectively reduced the patients' fear of heights, but the two conditions did not differ in their efficacy. The study replicated previous studies by showing that VRET is an effective treatment for acrophobia; however, contrary to the assumption, explicitly targeting the violation of threat expectancies did not improve outcome. This finding adds to other studies failing to provide clear evidence for expectancy violation as the primary mechanism underlying exposure therapy. Possible explanations for this finding and clinical implications are discussed, along with suggestions for further research.