In 1963, Ivan Sutherland develops an interactive computer program called Sketchpad which was the first among to use a Graphical User Interface. The user could draw directly into the screen using a pen like device called light pen.
In 1968, Ivan Sutherland along with his student Bob Sproull demonstrated a system that is believed to be the first head mounted display system with three dimensional tracking capabilities called Sword of Damocles. The setup consisted of stereoscopic display system displaying an output from a computer program which updated itself according to the movements of the user.
Fig 1. Ivan Sutherland's first VR Head Mounted Display, The Sword of Damocles