Abstract Virtual-reality (VR) users and developers have informally reported that time seems to pass more quickly while playing games in VR. We refer to this phenomenon as time compression: a longer real duration is compressed into a shorter perceived experience. To investigate this effect, we created two versions of a labyrinth-like game. The versions are identical in their content and mode of control but differ in their display type: one was designed to be played in VR, and the other on a conventional monitor (CM). Participants were asked to estimate time prospectively using an interval production method. Participants played each version of the game for a perceived five-minute interval, and the actual durations of the intervals they produced were compared between display conditions. We found that in the first block, participants in the VR condition played for an average of 72.6 more seconds than participants in the CM condition before feeling that five minutes had passed. This amounts to perceived five-minute intervals in VR containing 28.5% more actual time than perceived five-minute intervals in CM. However, the effect appeared to be reversed in the second block when participants switched display conditions, suggesting large novelty and anchoring effects, and demonstrating the importance of using between-subjects designs in interval production experiments. Overall, our results suggest that VR displays do produce a significant time compression effect. We discuss a VR-induced reduction in bodily awareness as a potential explanation for how this effect is mediated and outline some implications and suggestions for follow-up experiments.