This study investigates the use of virtual and augmented reality (VAR) in higher education on students’ self-efficacy in science and engineering, and academic performance. An innovative VAR classroom is set up as an immersive and interactive learning environment at Nanyang Technological University for curriculum-based learning. This classroom is equipped with 6 individual VR displays and headsets, where high-end computers are connected to each display providing the computational power required for VAR technology. 46 undergraduate engineering students experience the VAR lessons over the course of 5 weeks. The self-efficacy and academic performance of the students are measured for quantitative analysis with surveys and regular (pre-/post-) tests as they participated in the lessons. Post-lesson focus-group discussions and interviews are conducted for qualitative analysis. The data analysis shows a significant increase in students’ self-efficacy levels and academic performance after 5 weeks of VAR lessons. It is found that the collaborative, interactive and immersive nature of the VAR learning environment enriches students’ learning experiences and thus contributes to their learning effectiveness. The study provides insights into how the VAR learning environment affects undergraduate students’ learning, and how the VAR system can be deployed for effective STEM education