It surpassed the height the US Air Force considers the boundary of space (80km), and marks the first manned flight to space from US soil since 2011.
Rather than aiming for space using a NASA-esque vertically launched rocket, Virgin Galactic uses a rocket-powered space plane dubbed VSS Unity, a craft more comparable to the supersonic X planes developed by the U.S. military.
The test flight is scheduled to depart from Mojave, California at 1000 Eastern Time (1600 CET) on Thursday.
The spacecraft was piloted by Mark Stucky and former NASA astronaut Frederick "CJ" Sturckow.
The engine burned for 60 seconds, accelerating Unity to a maximum velocity of Mach 2.9, or 2.9 times the speed of sound, Virgin Galactic representatives said.
"If we have a very good day, we could potentially have the first space flight into space of Virgin Galactic, so that would be a big milestone from our personal company and then on a national level, I think this would be the first human spaceflight from American soil into space since the retirement of the USA space shuttle", stated George Whitesides, CEO of Virgin Galactic.More news: Alex Iwobi reveals real reason Arsenal lost to Southampton
"Excitingly, we are partly achieving that on the next flight by carrying four research payloads that are part of the NASA Flight Opportunities Program".
VSS Unity's peak altitude of 51.4 miles is similar to what Virgin Galactic has planned for commercial flights. "The spaceship was tested to its limits today and she performed just as we wished and we just couldn't be happier".
As VSS Unity returned to Earth, it fanned out a large tail that will guide the plane back through the Earth's atmosphere and toward Mojave for a runway landing.
The US government has awarded astronaut wings to pilots who ventured farther than roughly 80km beyond earth's surface.
These flights aren't the same as an orbital flight to space - which involves actually sending people around the Earth before coming back home.
Branson has said he wants to be one of the first on board.More news: Khawaja, Paine ride luck to extend Australia lead to 233
Virgin Galactic reaches space for the first time during its 4th powered flight from Mojave, Calif.
Now Branson says he aims to begin commercial flights by March of next year.
Virgin's latest flight test comes four years after the original SpaceShipTwo crashed during a test flight that killed the co-pilot and seriously injured the pilot, dealing a major setback to Virgin Galactic, a USA offshoot of the London-based Virgin Group. Blue Origin will use the more traditional method of spacecraft attached to a rocket launched from the ground.
Three technicians were killed in 2007 by an explosion while testing a propellant system at Scaled Composites LLC, which built SpaceShipOne and was building the first SpaceShipTwo for Virgin Galactic.
More than 600 people have committed up to $250,000 United States for rides in the six-passenger rocket, which is about the size of an executive jet.
"Safety's all that matters if you're putting people into space", he said.More news: Google to invest over $1 billion in NY expansion