Augmented reality (AR) is a rapidly emerging technology that superimposes digital objects onto real-world scenes as viewed in real time through a smartphone, tablet, or headset. Whereas AR has been adopted for retail, entertainment, and professional training, it also has potential as a novel, mobile, and efficacious treatment modality for psychological disorders. In particular, extinction-based therapies (e.g., anxiety, substance use disorders) could utilize AR to present stimuli in natural environments, enhancing generalizability beyond the clinic. The limited psychological literature on AR has focused on the treatment of simple phobias. Here, with the goal of bringing this technology to the attention of clinicians and researchers, we describe AR, contrast it with virtual reality, review the theoretical foundation for extinction-based therapies, provide examples for the treatment of substance use disorders, and identify theoretical, practical, and implementation-based research questions.