An experiment was conducted on the effect of a prototype see-thru head-mounted display (HMD) on visuo-motor adaptation. When wearing video see-thru HMDs in augmented reality systems, subjects see the world around them through a pair of head-mounted video cameras. The study looked at the effects of sensory rearrangement caused by a HMD design that displaces the user's "virtual" eye position forward (165 mm) and up (62 mm) toward the spatial position of the cameras. Measures of hand-eye coordination and speed on a manual task revealed substantial perceptual costs of the eye displacement, but also evidence of adaptation. Upon first wearing the video see-thru HMD, subjects' pointing errors increased significantly along the spatial dimensions displaced (the y and z dimensions). Speed of performance on a manual task decreased by 43% compared to baseline performance. Pointing accuracy improved by about a 1/3 as subjects adapted to the sensory rearrangement but did not reach baseline performance. When subjects removed the see-thru HMD there was evidence that their hand-eye coordination had been altered by the see-thru HMD. Negative aftereffects were observed in the form of greater errors in pointing accuracy compared to baseline. Although these effects are temporary, the results may have serious practical implications for the use of see-thru HMDs by user populations who depend on accurate hand-eye coordination such as surgeons.