BACKGROUND: Using traditional simulators (eg, cadavers, animals, or actors) to upskill health workers is becoming less common because of ethical issues, commitment to patient safety, and cost and resource restrictions. Virtual reality (VR) and augmented reality (AR) may help to overcome these barriers. However, their effectiveness is often contested and poorly understood and warrants further investigation. OBJECTIVE: The aim of this review is to develop, test, and refine an evidence-informed program theory on how, for whom, and to what extent training using AR or VR works for upskilling health care workers and to understand what facilitates or constrains their implementation and maintenance. METHODS: We conducted a realist synthesis using the following 3-step process: theory elicitation, theory testing, and theory refinement. We first searched 7 databases and 11 practitioner journals for literature on AR or VR used to train health care staff. In total, 80 papers were identified, and information regarding context-mechanism-outcome (CMO) was extracted. We conducted a narrative synthesis to form an initial program theory comprising of CMO configurations. To refine and test this theory, we identified empirical studies through a second search of the same databases used in the first search. We used the Mixed Methods Appraisal Tool to assess the quality of the studies and to determine our confidence in each CMO configuration. RESULTS: Of the 41 CMO configurations identified, we had moderate to high confidence in 9 (22%) based on 46 empirical studies reporting on VR, AR, or mixed simulation training programs. These stated that realistic (high-fidelity) simulations trigger perceptions of realism, easier visualization of patient anatomy, and an interactive experience, which result in increased learner satisfaction and more effective learning. Immersive VR or AR engages learners in deep immersion and improves learning and skill performance. When transferable skills and knowledge are taught using VR or AR, skills are enhanced and practiced in a safe environment, leading to knowledge and skill transfer to clinical practice. Finally, for novices, VR or AR enables repeated practice, resulting in technical proficiency, skill acquisition, and improved performance. The most common barriers to implementation were up-front costs, negative attitudes and experiences (ie, cybersickness), developmental and logistical considerations, and the complexity of creating a curriculum. Facilitating factors included decreasing costs through commercialization, increasing the cost-effectiveness of training, a cultural shift toward acceptance, access to training, and leadership and collaboration. CONCLUSIONS: Technical and nontechnical skills training programs using AR or VR for health care staff may trigger perceptions of realism and deep immersion and enable easier visualization, interactivity, enhanced skills, and repeated practice in a safe environment. This may improve skills and increase learning, knowledge, and learner satisfaction. The future testing of these mechanisms using hypothesis-driven approaches is required. Research is also required to explore implementation considerations.