Understanding the unique impact of extended reality (XR) technologies, such as virtual reality (VR) and mixed reality (MR), on emotional states is important for predicting users’ subsequent judgments and behaviors. Nevertheless, it remains unclear whether and how the differences in the structural affordances of VR and MR (i.e., a sense of being there vs. a sense of an object being in the physical environment) can indeed induce distinct effects. Therefore, the present study aims to elucidate the role of VR and MR technologies on users’ emotional states through the theoretical lens of plausibility illusion. Specifically, we hypothesized that plausibility illusion would mediate the effects of XR modality on emotional states, including arousal and perceived fear toward a fearful object. In addition, we explored the potential moderating role of object virtuality (i.e., ontological characteristic of virtual objects) in the relationship between XR modality and plausibility illusion. Results from a mixed 2 (XR modality: VR vs. MR) 2 (virtuality: para-authentic vs. artificial) design experiment (N = 100) showed that VR induced a higher sense of plausibility illusion than MR, which played a mediating role in amplifying arousal and perceived fear. This finding suggests that the differences in the structural affordances of VR and MR can induce distinctive effects on emotional states. Further implications of the findings are discussed.