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ABSTRACT We review the literature showing that positive illusions (i.e., self-aggrandizement, unrealistic optimism, and exaggerated perceptions of control) are common and associated with successful adjustment to stressful events, including conditions of extreme adversity. Using theory and recent data, we offer a basis for integrating positive illusions with the constraints of reality. We explicitly contrast the social psychological model of positive illusions with a personality viewpoint that addresses the question “Do higher levels of positive illusions predict higher levels of adjustment?” These issues are explored in the context of people coping with an array of normal stressful events, as well as those coping with more extreme stressful events, including cancer, heart disease, and HIV infection. Life is seldom as unendurable as, to judge by the facts, it ought to be. —Brooks Atkinson