Difficulties in social interaction, verbal and non-verbal communications as well as repetitive and atypical patterns of behavior, are typical characteristics of Autism spectrum disorders (ASD). Advances in computer and robotic technology are enabling assistive technologies for intervention in psychiatric disorders such as autism spectrum disorders (ASD) and schizophrenia (SZ). A number of research studies indicate that many children with ASD prefer technology and this preference can be explored to develop systems that may alleviate several challenges of traditional treatment and intervention. The current work presents development of an adaptive virtual reality-based social interaction platform for children with ASD. It is hypothesized that endowing a technological system that can detect the feeling and mental state of the child and adapt its interaction accordingly is of great importance in assisting and individualizing traditional intervention approaches. The proposed system employs sensors such as eye trackers and physiological signal monitors and models the context relevant psychological state of the child from combination of these sensors. Preliminary affect recognition results indicate that psychological states could be determined from peripheral physiological signals and together with other modalities including gaze and performance of the participant, it is viable to adapt and individualize VR-based intervention paradigms.