Numerous laboratory studies have demonstrated that craving is a cue-bound phenomenon evoked when individuals are exposed to stimuli associated with previous drug administration. In traditional cue-reactivity studies smokers experience higher levels of craving and modest physiological arousal when exposed to cigarette cues compared to neutral cues. Cue-reactivity studies using virtual reality (VR) have shown similar cue-reactivity effects, and the power of specific smoking cues (e.g., lit cigarette) to evoke craving is well established. However, less is known about the power of other stimuli to evoke responses within VR. The present study examined the influence of environmental context on smokers' cue responses in VR. We explored the extent to which specific cigarette cues in an environment associated with smoking, versus the same smoking environment devoid of specific cues, influenced craving and arousal. This comparison aimed to demonstrate whether a VR environment alone has the ability to evoke reactivity, and how much of the reactivity elicited can be accounted for by exposure to specific cues versus a smoking-related environment without specific cues. Non-treatment seeking smokers were exposed to VR environments including two nature scenes (neutral environments) and two identical convenience store scenes (one devoid of explicit cigarette cues and the other with cigarette cues added). Craving was reported after each environment, and heart rate and skin conductance were recorded throughout the session. Findings replicate previous research using VR to evoke craving. This study is the first to demonstrate that a VR smoking context devoid of specific cues also has the power to elicit significant craving. However, it remains unclear when specific cues are added to the smoking environment how much of the craving reported is due to exposure to the cues versus the context. Physiological results indicated that measures of arousal obtained in VR settings are more complex than those from traditional cue reactivity methods. VR is unique because, to date, it is the only laboratory method for presenting specific cues in a realistic environmental context. The finding that context alone can elicit craving supports the use of VR to help better understand smokers' real-world relationship with stimuli that encourage smoking.