Abstract: Confabulation, the emergence of memories of events and experiences which in reality never took place, has puzzled clinicians for over a century. There are different forms, which partly of fully dissociate from each other, both functionally and anatomically: 1) simple provoked confabulations, that is, intrusions in memory tests, which appear to be a normal response to a faulty memory; 2) momentary confabulations that patients produce in discussions or upon questioning; they probably have different mechanisms in different diseases; 3) fantastic confabulations that are illogical and nonsensical; they have been observed in confusional states, in severe dementia, and in severe, untreated psychosis; 4) behaviourally spontaneous confabulations which reflect a confusion of reality in thinking, are often concordant with the patient's spontaneous behaviour, and which are associated with disorientation and amnesia. This talk focuses on this latter form, which constitutes a natural model for how the brain creates reality in thinking. In behaviourally spontaneous confabulation, actions are intermittently guided by memories that may have justly guided their behaviour in the past but which do not pertain to true ongoing reality. This failure appears to result from an inability to suppress the interference of memories that do not pertain to now. Lesions involve the posterior medial orbitofrontal cortex (area 13) or structures directly connected with it. Functional imaging and electrophysiological studies suggested that this “suppression” is conveyed by area 13 and indeed corresponds to a filtering of upcoming memories according to their relation with ongoing reality. This filtering appears to adjust the “cortical format” of memories at an early stage of processing, at 200–300 ms, before processes of (conscious) recognition and re-encoding set in. The mechanism by which the orbitofrontal cortex exerts this filtering has been unknown. A recent study showed that disorientation and behaviourally spontaneous confabulations are tightly associated with deficient extinction capacity—the ability to integrate negative prediction errors into behaviour. Thus, rather than invoking high-level monitoring functions, the human brain seems to make use of an ancient biological faculty, extinction, to keep thought and behaviour in phase with reality.