SpaceShipTwo, carrying a passenger for the first time, exceeds the US definition of space - anything over an altitude of 50 miles
Abu Dhabi-backed Virgin Galactic's spacecraft reached an altitude of more than 55 miles (88.5 kilometers) on Friday, carrying for the first time a passenger in addition to its two pilots.
SpaceShipTwo, built by British billionaire Richard Branson to carry tourists into space, launched from California's Mojave desert and flew to an altitude of 55.87 miles (89.9 kms), the company said.
The US definition of space is anything over an altitude of 50 miles. The Virgin craft made it past that for the first time in December, reaching an altitude of 50.9 miles.
Abu Dhabi's Aabar Investments, now under Mubadala, acquired a 31.8 percent stake in Virgin Galactic in 2010.
Branson announced with great fanfare at the time that it was the first time since NASA ended its space shuttle program in 2011 that an American vessel had carried humans into space.
However, the Virgin craft still has not crossed the internationally accepted boundary between Earth's outer atmosphere and space, known as the Karman Line, which is set at an altitude of 62 miles (100 kms).
"SpaceShipTwo, welcome back to space," wrote Virgin Galactic as it Tweeted updates throughout the event, without sending out any live footage.
The spacecraft travelled at a speed of Mach 3, or three times the speed of sound in its ascent, and landed without incident at the Mojave spaceport.
It is designed to carry six passengers, but test flights are years behind schedule in large part because of an accident that killed a test pilot in 2014.
Branson told AFP earlier this month that he hoped the test flights would be far enough ahead by July that he would be able to join a flight.
For the first time Friday, the flight carried a passenger, Virgin Galactic's Beth Moses, who will be in charge of training the company's future space tourists.
To take off from the ground, SpaceShipTwo is carried by another larger plane, WhiteKnightTwo, which resembles a combination of two airplanes attached by their wing tips.
When it is high enough, it releases the spaceship which then fires up its own rocket engine and ascends for roughly a minute into space.
At the apogee, its passengers float in zero-gravity for several minutes. It then descends and glides back to the landing strip.
Branson's main rival is Blue Origin, created by billionaire Amazon founder Jeff Bezos.
Bezos told an audience in New York this week that his New Shepard suborbital vehicle would start flying people later this year and to a greater altitude than SpaceShipTwo.
"One of the issues that Virgin Galactic will have to address, eventually, is that they are not flying above the Karman Line, not yet," Bezos said, quoted by Space News.
New Shepard has already flown above the Karman Line, but not with people on board.