To increase the accessibility and efficiency of virtual reality exposure therapy (VRET) this paper proposes a system for home-based use where patients with social phobia are supported by a virtual health agent. We present an overview of our system design, and discuss key techniques such as (1) dialogue techniques to create automated free speech dialogue between virtual characters and patients in virtual reality worlds; (2) a multi-modal automatic anxiety feedback-loop mechanism to control patients’ anxiety level; and (3) motivational techniques applied by a virtual health agent. The system was evaluated in a pilot study where five patients with social phobia utilized our home-based VRET system. The results showed that the system was able to evoke the required anxiety in patients and that over time self-reported anxiety and heart rate gradually decreased as expected in exposure therapy.