Virtual reality (VR) and augmented reality (AR) systems have garnered recent widespread attention due to increased accessibility, functionality, and affordability. These systems sense user inputs and typically provide haptic, audio, and visual feedback to blend interactive virtual environments with the real world for an enhanced or simulated reality experience. With applications ranging from immersive entertainment, to teleoperation, to physical therapy, further development of this technology has the potential for impact across multiple disciplines. However, VR/AR devices still face critical challenges that hinder integration into everyday life and additional applications; namely, the rigid and cumbersome form factor of current technology that is incompatible with the dynamic movements and pliable limbs of the human body. Recent advancements in the field of soft materials are uniquely suited to provide solutions to this challenge. Devices fabricated from flexible and elastic bio-compatible materials have significantly greater compatibility with the human body and could lead to a more natural VR/AR experience. This review reports state-of-the-art experimental studies in soft materials for wearable sensing and haptic feedback in VR/AR applications, explores emerging soft technologies for on-body devices, and identifies current challenges and future opportunities toward seamless integration of the virtual and physical world.