Performance-based functional tests for the evaluation of daily living activities demonstrate strong psychometric properties and solve many of the limitations associated with self- and informant-report questionnaires. Virtual reality (VR) technology, which has gained interest as an effective medium for administering interventions in the context of healthcare, has the potential to minimize the time-demands associated with the administration and scoring of performance-based assessments. To date, efforts to develop VR systems for assessment of everyday function in older adults generally have relied on non-immersive systems. The aim of the present study was to evaluate the feasibility of an immersive VR environment for the assessment of everyday function in older adults. We present a detailed case report of an elderly woman who performed an everyday activity in an immersive VR context (Virtual Reality Action Test) with two different types of interaction devices (controller vs. sensor). VR performance was compared to performance of the same task with real objects outside of the VR system (Real Action Test). Comparisons were made on several dimensions, including (1) quality of task performance (e.g., order of task steps, errors, use and speed of hand movements); (2) subjective impression (e.g., attitudes), and (3) physiological markers of stress. Subjective impressions of performance with the different controllers also were compared for presence, cybersickness, and usability. Results showed that the participant was capable of using controllers and sensors to manipulate objects in a purposeful and goal-directed manner in the immersive VR paradigm. She performed the everyday task similarly across all conditions. She reported no cybersickness and even indicated that interactions in the VR environment were pleasant and relaxing. Thus, immersive VR is a feasible approach for function assessment even with older adults who might have very limited computer experience, no prior VR exposure, average educational experiences, and mild cognitive difficulties. Because of inherent limitations of single case reports (e.g., unknown generalizability, potential practice effects, etc.), group studies are needed to establish the full psychometric properties of the Virtual Reality Action Test.