AbstractImmersive virtual reality is a powerful method to modify the environment and thereby influence experience. The present study used a virtual hand illusion and context manipulation in immersive virtual reality to examine top-down modulation of pain. Participants received painful heat stimuli on their forearm and placed an embodied virtual hand (co-located with their real one) under a virtual water tap, which dispensed virtual water under different experimental conditions. We aimed to induce a temperature illusion by a red, blue or white light suggesting warm, cold or no virtual water. In addition, the sense of agency was manipulated by allowing participants to have high or low control over the virtual hand’s movements. Most participants experienced a thermal sensation in response to the virtual water and associated the blue and red light with cool/cold or warm/hot temperatures, respectively. Importantly, the blue light condition reduced and the red light condition increased pain intensity and unpleasantness, both compared to the control condition. The control manipulation influenced the sense of agency, but did not influence pain ratings. The large effects revealed in our study suggest that context effects within an embodied setting in an immersive virtual environment should be considered within VR based pain therapy.