Virtual Reality (VR) has gained momentum in the treatment of various mental health conditions. Despite its potential and emphasis on better use of technology in healthcare strategies, VR therapy for severe mental illness remains underdeveloped and understudied. This will be the first randomized controlled trial to combine cognitive behavioral therapy-based VR with state-of-the-art Artificial Intelligence. Reduced quality of life, social withdrawal and inactivity found in psychotic disorders may be largely explained by avoidance due to severe symptoms of anxiety, present in as many as two-thirds of patients with schizophrenia. Alleviating anxiety may thus be key to help improve functional outcomes. The aim of this study is to provide novel information about VR therapy in psychosis employing the newly developed RecoVRy application. Study objectives are to examine short- and long-term effects on real-world functioning, psychiatric symptoms, and quality of life. A total of 150 participants will be recruited from five Norwegian hospitals. Participants will be randomly assigned to either receive the RecoVRy intervention (N=75) alongside treatment as usual or a control intervention (N=75) in which they engage with three distinct VR games. RecoVRy will generate new and important knowledge to improve mental health services in psychosis and hopefully improve existing practise and facilitate personalized treatment. RecoVRy will fill knowledge gaps concerning anxiety in psychosis, as this is often left untreated and consequently create societal benefits by increasing social and functional participation. Finally, knowledge from RecoVRy can easily be generalized to other patient groups and health sectors.