The nature of fantasy has been little discussed, despite its importance in the arts. Its significance is brought out here in relation to the long‐standing debate on the alleged paradox of fiction—that we respond emotionally to characters and events known to be unreal. Examination of the paradox shows it to be ill founded once the nature of fantasy is appreciated. Moreover, a detailed consideration of fantasy shows that it can itself provide a plausible account of our emotional reactions to creative (...) literature, an account that, after a review of some possible objections, is then contrasted with the leading contemporary theories. (shrink)