Cultural understanding and awareness are crucial for English as a Foreign Language (EFL) learners, yet effective learning of the target culture often remains a challenge in traditional classrooms. Immersive virtual reality (iVR) introduces an innovative avenue for cultural learning by enabling learners to experience the target cultures in a more immersive and engaging way. This study developed an iVR environment of London (iVR London) based on the classic novel "Around the World in 80 Days," incorporating several instructional principles, including contextualized learning, active and experiential learning, and the cognitive theory of multimedia learning. The aim was to increase EFL students' motivation and understanding of literature and British culture. A mixed methods approach was employed to evaluate the effects of using iVR for learning literature and culture. Students' reflection papers (qualitative data, primary data sources) were analyzed inductively and deductively, and themes were identified in four domains, technical, behavioral, affective, and cognitive. The results indicated that iVR London significantly increased student motivation, engagement (behavioral, affective, and cognitive) and learning, which was corroborated by quantitative data (pre- and posttests, secondary data sources). The study also highlighted how the technological affordances of iVR supported experiential, contextualized, and affective-cognitive learning. Finally, the study provides pedagogical insights for the instructional design of educational iVR.