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Abstract The stigma of mental illness is a form of negative judgmental knowledge and is a barrier to individual seeking treatment. Contact-based educational interventions with first-person perspective (1PP) combined with immersive virtual reality (IVR) is promising as an anti-stigma intervention. This study aims to investigate the effectiveness of 1PP anti-stigma IVR intervention compared to video in enhancing depression knowledge and reducing stigma, as well as to examine the corresponding depression knowledge brain activity change using functional magnetic resonance imaging (fMRI). Participants engaged in a 1PP anti-stigma intervention using both IVR and conventional video, focusing on the daily life and recovery of a patient with mild depression. The change in depression knowledge, stigma-related behavioral, and brain activity using fMRI were measured at pre- and post-interventions. Depression knowledge improved for both interventions; however, only the IVR intervention reduced stigma. In the IVR intervention, depression knowledge score was positively associated with neural response in the right superior frontal gyrus activation, indicative of empathic concern. Conversely, the video intervention correlated with increased activity in the right anterior insula, suggesting a distress-related response. The findings demonstrate that the immersive nature of IVR can reduce stigma more effectively than video intervention. This effectiveness is underpinned by the change in depression knowledge on neural activity, with IVR fostering empathy-related behavioral responses. The results highlight the potential of IVR in enhancing empathic understanding and reducing stigma towards mental illness, emphasizing the need for further exploration into immersive technologies for mental health education.