Virtual rehabilitation has been used during decades to provide a more personalized, controlled, and enjoyable experience on upper-limb motor rehabilitation. Since novel virtual reality (VR) technologies are now accessible and highly immersive, the challenge for a wide dissemination of virtual rehabilitation in clinical scenarios has shifted from the hardware robustness to the software intelligence. A sophisticated technique that provides physiological intelligence to novel human-computer interaction (HCI) applications is biocybernetic adaptation. The concept emerges from the electrophysiological computing field, and it proposes using body signals to detect human states (e.g. workload or fatigue) and modulate the virtual activity accordingly. This paper evaluates the effects of using biocybernetic adaptation in a virtual rehabilitation game that aims to encourage users to exert at a desirable intensity level while interacting with the virtual environment. The system relies on surface-electromyography (sEMG) signals to detect fatigue levels in real-time and adapt the game challenge dynamically. Perceived fatigue levels, game user experience, and game performance parameters are assessed after playing the game, considering two different visualization modalities: non-immersive (conventional flat screen) and immersive (VR headset). Results revealed how the biocybernetic system in the immersive condition not only produced lower levels of perceived fatigue compared with the non-immersive, but also, created a more enjoyable and positive experience in a controlled experiment with 24 healthy subjects. Moreover, participants in the immersive condition showed a better performance in the virtual game and higher usability levels scored by users compared with the non-immersive condition. To conclude, we highlight the importance of combining novel immersive approaches with physiologically aware systems to enhance the benefits of virtual rehabilitation therapies.