While research on counterfactuals has closely examined the psychological antecedents and consequences of thinking counterfactually (imagining alternatives to past events), little is known about the effects of counterfactual communication, and in particular, how such thoughts are interpreted by others. In this paper, I argue that counterfactual communication differentially affects impressions formed of speakers by receivers depending on the general content of the counterfactual. Findings from an archival study and a scenario study demonstrated convergent results: Individuals who communicated upward counterfactuals (thoughts of how things could have been better) were more positively perceived by receivers than were individuals who communicated downward counterfactuals (thoughts of how things could have been worse). This difference stemmed from an enhancement effect of upward counterfactuals. Further analysis revealed that the relationship between counterfactual communication and impression formation was mediated by receivers' perceptions of the extent to which speakers took responsibility for their actions. Copyright © 2009 John Wiley & Sons, Ltd.