We present Roomify, a spatially-grounded transformation system that generates themed virtual environments anchored to users' physical rooms while maintaining spatial structure and functional semantics. Current VR approaches face a fundamental trade-off: full immersion sacrifices spatial awareness, while passthrough solutions break presence. Roomify addresses this through spatially-grounded transformation—treating physical spaces as "spatial containers'' that preserve key functional and geometric properties of furniture while enabling radical stylistic changes. Our pipeline combines in-situ 3D scene understanding, AI-driven spatial reasoning, and style-aware generation to create personalized virtual environments grounded in physical reality. We introduce a cross-reality authoring tool enabling fine-grained user control through MR editing and VR preview workflows. Two user studies validate our approach: one with 18 VR users demonstrates a 63% improvement in presence over passthrough and 26% over fully virtual baselines while maintaining spatial awareness; another with 8 design professionals confirms the system's creative expressiveness (scene quality: 5.95/7; creativity support: 6.08/7) and professional workflow value across diverse environments.
ACM CHI Conference on Human Factors in Computing Systems