The work aims to explore the design of virtual display for smart home from the perspective of interactive narrative, so as to enhance users' immersive experience and interactivity. The current research on virtual display of smart home mainly focuses on the technical implementation, and seldom explores the role of narrative guidance in users' cognitive and emotional experiences. Therefore, this paper, in combination with the theory of interactive narrative, constructs the narrative design strategy for the virtual display of smart home. Firstly, by systematically reviewing the existing problems of virtual display for smart home, the contradictions among the demands for simplification of user cognition, massification of functions, and user personality, as well as the contradiction between the single interaction mode and the demand for active interaction from users were analyzed. Subsequently, from the perspectives of story structure, integration of interaction methods and user role immersion, the design strategies for virtual display and interactive narrative of smart home were proposed. Finally, the virtual exhibition hall design of Youzhiyunju was taken as a practical case for design application and effect verification. Experimental data indicated that the virtual display of smart home based on interactive narrative was more effective in guiding users to understand product functions and obtaining emotional feedback. However, users' cognitive effects were influenced by their experiences and ages. The research findings indicate that the virtual display design of smart home based on interactive narrative can effectively enhance users' sense of participation and satisfaction, and promote users' understanding and acceptance of the smart home system. In the future, the display of smart home should pay more attention to the emotional connection and personalized interaction with users, so as to improve the user experience and enhance market competitiveness.