The human imagination remains one of the last uncharted terrains of the mind. People often imagine how events might have turned out “if only” something had been different. The “fault lines” of reality, those aspects more readily changed, indicate that counterfactual thoughts are guided by the same principles as rational thoughts. In the past, rationality and imagination have been viewed as opposites. But research has shown that rational thought is more imaginative than cognitive scientists had supposed. In The Rational Imagination, I argue that imaginative thought is more rational than scientists have imagined. People exhibit remarkable similarities in the sorts of things they change in their mental representation of reality when they imagine how the facts could have turned out differently. For example, they tend to imagine alternatives to actions rather than inactions, events within their control rather than those beyond their control, and socially unacceptable events rather than acceptable ones. Their thoughts about how an event might have turned out differently lead them to judge that a strong causal relation exists between an antecedent event and the outcome, and their thoughts about how an event might have turned out the same lead them to judge that a weaker causal relation exists. In a simple temporal sequence, people tend to imagine alternatives to the most recent event. The central claim in the book is that counterfactual thoughts are organised along the same principles as rational thought. The idea that the counterfactual imagination is rational depends on three steps: (1) humans are capable of rational thought; (2) they make inferences by thinking about possibilities; and (3) their counterfactual thoughts rely on thinking about possibilities, just as rational thoughts do. The sorts of possibilities that people envisage explain the mutability of certain aspects of mental representations and the immutability of other aspects.