In this behavioral and electrophysiological study, we compare novel word learning, particularly lexical form acquisition, in an immersive virtual reality (VR) context with a picture-word (PW) association context. We also test whether inhibitory control and age of second language acquisition (L2 AoA) have modulating effects. Chinese speakers of L2 English learned two sets of German words, one set in each of the contexts. Behavioral performance from a subsequent recognition task indicated that responses to VR-learned words were faster than PW-leaned words. ERPs revealed that VR-learned words elicited more negative N100 and N200 waveforms than PW-learned words. Moreover, a significant relationship between L2 AoA and N200 amplitude was observed for VR-learned words. Taken together, the results suggest that the multi-sensory, interactive experience simulated by an immersive VR context has a positive effect on early lexical form acquisition of novel words.