The application of augmented reality (AR) technology for assembly guidance is a novel approach in the traditional manufacturing domain. In this paper, we propose an AR approach for assembly guidance using a virtual interactive tool that is intuitive and easy to use. The virtual interactive tool, termed the Virtual Interaction Panel (VirIP), involves two tasks: the design of the VirIPs and the real-time tracking of an interaction pen using a Restricted Coulomb Energy (RCE) neural network. The VirIP includes virtual buttons, which have meaningful assembly information that can be activated by an interaction pen during the assembly process. A visual assembly tree structure (VATS) is used for information management and assembly instructions retrieval in this AR environment. VATS is a hierarchical tree structure that can be easily maintained via a visual interface. This paper describes a typical scenario for assembly guidance using VirIP and VATS. The main characteristic of the proposed AR system is the intuitive way in which an assembly operator can easily step through a pre-defined assembly plan/sequence without the need of any sensor schemes or markers attached on the assembly components. / Singapore-MIT Alliance (SMA)