Hallucinations are among the most severe and puzzling forms of psychopathology. Although usually regarded as first-rank symptoms of schizophrenia, they are found in a wide range of medical and psychiatric conditions. Moreover, a substantial minority of otherwise normal individuals report hallucinatory experiences. The purpose of this article is to review the considerable research into the cognitive mechanisms underlying (particularly psychotic) hallucinations that has been carried out and to integrate this research within a general framework. The available evidence suggests that hallucinations result from a failure of the metacognitive skills involved in discriminating between self-generated and external sources of information. It is likely that different aspects of these skills are implicated in different types of hallucinatory experiences. Further research should focus on specific metacognitive deficits associated with different types of hallucinations and on treatment strategies designed to train hallucinators to reattribute thoughts to themselves.