Abstract: Building favorable destination image and evoking positive feelings toward tourism ads are essential to the success of destination marketing in the competitive tourism business environment. The current study investigated the potential of virtual reality (VR) in providing new and innovative avenues for promoting destination image in tourism and testing its impact on advertising engagement that follows the VR experience. Despite the increased use of VR in destination advertising and its advantages over traditional media platforms, its effectiveness and the underlying mechanisms driving advertising engagement remain underexplored. Guided by the proposed conceptual model of immersive virtual tours, the current study investigated the roles of self-location and ad engagement along with several key variables (i.e., enjoyment, destination image change, attitude toward the ad and the brand) using a lab experiment (N = 78). Results indicate that experiencing a VR tour of a destination had a positive impact on ad engagement and that enjoyment of the immersive experience mediated the relationship between self-location and engagement with an ad shown after the virtual experience. The level of immersion moderated the effect of VR experience on ad engagement. Theoretical and managerial implications of VR tourism are discussed.