Yes, PSVR does work on PS5. So far we know that you'll be able to enjoy native PS5 releases and backwards compatible PS4 games using PlayStation VR on PlayStation 5. Remember, the games that you play will need to have virtual reality modes in order to be enjoyed with PSVR. It's currently unclear whether PSVR will have a Cinematic Mode on PS5.
You'll be able to use all of your existing kit to use PSVR on PS5, although you will need an adaptor to connect your existing PlayStation Camera to the next-gen console. Sony will provide this for free (See Also: How to Get a Free PS5 PlayStation Camera Adaptor for PSVR). The new PS5 HD Camera is not compatible with PSVR titles.