This study examines how extended reality (XR) is expanding into clinical intervention settings in healthcare by reviewing previous discussions and applications of XR-based therapy and rehabilitation. To this end, it outlines the concepts and necessity of XR-based therapy and rehabilitation and explores the significance of immersion, attentional distraction, repetitive training, multisensory feedback, and data-driven personalization in therapeutic processes. It also examines the potential applications of XR, focusing on key cases involving pain management, mental health interventions, haptic-based hand and motor rehabilitation, eye-tracking-based cognitive and visual-perceptual rehabilitation, and home-based and telerehabilitation. The findings suggest that XR has the potential to promote patients’ active participation and personalize therapeutic experiences. However, challenges remain, including validating clinical effectiveness, ensuring safety, establishing evaluation criteria, protecting data, and developing institutional frameworks.