Imagination is, in general, the power or process of producing mental images and ideas. The term is technically used in psychology for the process of reviving in the mind percepts of objects formerly given in sense perception. Since this use of the term conflicts with that of ordinary language, some psychologists have preferred to describe this process as "imaging" or "imagery" or to speak of it as "reproductive" as opposed to "productive" or "constructive" imagination. Imagined images are seen with the "mind's eye". One hypothesis for the evolution of human imagination is that it allowed conscious beings to solve problems (and hence increase an individual's fitness) by use of mental simulation.

The common use of the term is for the process of forming in the mind new images which have not been previously experienced, or at least only partially or in different combinations. Fairy tales and fiction generally are the result of this process of combination. Imagination in this sense, not being limited to the acquisition of exact knowledge by the requirements of practical necessity, is up to a certain point free from objective restraints. The ability to imagine one's self in another person's place is very important to social relations and understanding. (Some psychiatrists suspect this is beyond the grasp of a sociopath. All they know is the gratification of personal pleasure). In various spheres, however, even imagination is in practice limited: thus a man whose imaginations do violence to the elementary laws of thought, or to the necessary principles of practical possibility, or to the reasonable probabilities of a given case is regarded as insane.

The same limitations beset imagination in the field of scientific hypothesis. Progress in scientific research is due largely to provisional explanations which are constructed by imagination, but such hypotheses must be framed in relation to previously ascertained facts and in accordance with the principles of the particular science.

In spite, however, of these broad practical considerations, imagination differs fundamentally from belief in that the latter involves "objective" control of subjective activity. The play of imagination, apart from the obvious limitations (e.g. of avoiding explicit self-contradiction ), is conditioned only by the general trend of the mind at a given moment. Belief, on the other hand, is immediately related to practical activity: it is perfectly possible to imagine myself a millionaire, but unless I believe it I do not, therefore, act as such. Belief always endeavours to conform to objective conditions; though it is from one point of view subjective it is also objectively conditioned, whereas imagination as such is specifically free. The dividing line between imagination and belief varies widely in different stages of mental development. Thus someone from a technologically primitive culture who is ill frames an ideal reconstruction of the causes of his illness, and attributes it to the hostile magic of an enemy. In ignorance of pathology he is satisfied with this explanation, and actually believes in it, whereas such a hypothesis in the mind of someone who understood germ theory it would be treated as a pure effort of imagination, or even as a hallucination. It follows that the distinction between imagination and belief depends in practice on knowledge, social environment, training and the like.

Although, however, the absence of objective restraint, i.e. a certain unreality, is characteristic of imagination, none the less it has great practical importance as a purely ideational activity. Its very freedom from objective limitation makes it a source of pleasure and pain. A person of vivid imagination suffers acutely from the imagination of perils besetting a friend. In fact in some cases the ideal construction is so "real" that specific physical manifestations occur, as though imagination had passed into belief or the events imagined were actually in progress. See, for example, psychosomatic illness and Folie a deux.