The transfer of the behaviors of a human's upper limbs to an avatar is widely used in the field of virtual reality rehabilitation. To perform the transfer, movement tracking technology is required. Traditionally, wearable tracking devices are used for tracking; however, these devices are expensive and cumbersome. Recently, non-wearable upper-limb tracking solutions have been proposed, which are less expensive and more comfortable. However, most products cannot track the upper limbs, including the arms and all the fingers at the same time, which limits the limb parts for tracking in a virtual environment and may lead to a limited rehabilitation effect.In this paper, a novel virtual reality rehabilitation system (VRRS) was developed for upper-limb rehabilitation. The VRRS could track the motion of both upper limbs, integrate fine finger motion and the range of motion of the entire arm and map the motion to an avatar. To test the performance of VRRS, two experiments were designed. In the first experiment, we investigated the effect of VRRS on virtual body ownership, agency and location of the body and usability in 8 healthy participants by comparing it with a partial upper-limb tracking method based on a Leap Motion controller (LP) in the same virtual environments. In the second experiment, we examined the feasibility of VRRS in upper-limb rehabilitation with 27 stroke patients.VRRS improved the users' senses of body ownership, agency, and location of the body. The users preferred using the VRRS to using the LP. In addition, we found that although the upper limb motor function of patients from all groups was improved, the difference between the FM scores tested on the first day and the last day of the experimental group was more significant than that of the control groups.A VRRS with motion tracking of the upper limbs and avatar control including the arms and all the fingers was developed. It resulted in an improved user experience of embodiment and effectively improved the effects of upper limb rehabilitation in stroke patients.The study was registered at the First Affiliated Hospital of Jinan University Identifier: KY-2020-036; Date of registration: June 01, 2020.© 2021. The Author(s).