As parallel developments, both artificial intelligence (AI) and virtual reality (VR) are rapidly scaling up in the current decade. AI automates complex systems from industrial processes to customer relations and activities once reserved for humans, such as driving. Simultaneously, VR is revolutionizing learning and workforce training and reinventing the oldest of human arts, storytelling. As these developments converge, AI is becoming a catalyzing technology that transforms immersive experiences, and VR will give visual form to AI programming through embodied intelligent agents. This confluence raises profound philosophical questions that have their roots in Alan Turning's work. Will we be able to distinguish AI-based avatars from human-based digital beings in virtual worlds? How will we respond to AI when it is not embedded in programming but interacts with us through affective interfaces? The current ethical debates over AI and the implications of innovative immersive experiences in VR are the early signposts of what lies ahead - a road that weaves its way through treacherous terrain to incredible opportunities to transform humanity's future.