Knee arthrocentesis is a simple procedure commonly performed by general practitioners and junior doctors. As such, doctors should be competent and comfortable in performing the technique by themselves; however, they need to be adequately trained. The best method to ensure practitioner proficiency is by optimizing teaching at an institutional level, thus, educating all future doctors in the procedure. However, the Coronavirus Disease 19 (COVID-19) pandemic caused significant disruption to hospital teaching for medical students which necessitated investigating the effectiveness of virtual reality (VR) as a platform to emulate hospital teaching of knee arthrocentesis. A workshop was conducted with 100 fourth year medical students divided into three Groups: A, B and C, each receiving a pre-reading online lecture. Group A was placed in an Objective Structured Clinical Examination (OSCE) station where they were assessed by a blinded orthopaedic surgeon using the OSCE assessment rubric. Group B undertook a hands-on practice station prior to assessment, while Group C received a VR video (courtesy of the University of Adelaide’s Health Simulation) in the form of VR headset or 360° surround immersion room and hands-on station followed by the OSCE. Upon completion of the workshop, students completed a questionnaire on their confidence with the procedure and the practicality of the VR station. OSCE scores were compared between Groups B and C to investigate the educational value of VR teaching. On average, students with VR headsets reported higher confidence with the procedure and were more inclined to undertake it on their own. Students in Group C who used the VR station prior to assessment scored higher than the non-VR Groups (Group A, 56%; Group B, 67%; Group C 83%). Students in Group A had statistically significant results on average compared to those in Group B (t(69) = 3.003, p = 0.003), as do students in Group B compared to Group C (t(62) = 5.400, p < 0.001). Within Group C students who were given VR headsets scored higher than immersion room students. The VR headset was beneficial in providing students with a representation of how knee arthrocentesis may be conducted in the hospital setting. While VR will not replace conventional in-hospital teaching, given current technological limitations, it serves as an effective teaching aid for arthrocentesis and has many other potential applications for a wide scope of medicine and surgical training.