In two studies we investigate children's reasoning about the relation between imagination and physical reality. Specifically, we probe young children's understanding that physical objects are not created by the process of imagining. Children aged 3 to 5 years were instructed to imagine objects inside boxes. Children first made verbal judgements about the existence of the imagined objects, and then participated in a behavioural measure. The behavioural measure involved a request from another person for an object of the same type as the one the child had imagined, and children responded by handing this person any of the boxes they believed to contain the requested object. Children's verbal responses indicated some degree of belief in the reality of imagined contents. However, in response to a request for the object, most children did not give the person the box in which they had imagined the object. The presence or absence of a real counterpart to the imagined object seemed to affect this tendency. Results are interpreted in terms of how children's perception of a situation can affect their judgements about imagination.