Section A provides a critical review of the literature pertinent to children’s imaginary companions, including definitional issues, historical background, and prevalence. Empirical research concerning the characteristics of children who create imaginary companions is presented, followed by an overview of theories attempting to explain the development and functions of imaginary companions. Empirical research investigating the functions of imaginary companions in normative populations is then reviewed, followed by research into the imaginary companions of children from clinical populations. The review concludes by reviewing the literature into the use of imaginary companions as part of psychological therapy. Section B Imaginary companions represent a common childhood developmental phenomenon, to date, largely neglected in the clinical literature. The grounded theory study investigates the functions and therapeutic use of imaginary companions in a clinical population, by interviewing clinicians working therapeutically with young people accessing Child and Adolescent Mental Health Services. Participants were 10 UK clinicians, most practising as child clinical psychologists. Clinicians reported that imaginary companions served a number of fundamental functions, including serving as a communication aide, a secure attachment figure, proving mastery over a child’s world, and acting to maintain stability in the environment, and in a child’s self-image. Imaginary companions were utilised by most clinicians as part of engagement, and to gain insight into young people’s difficulties. Depending on their salience, and congruence with young people’s self-image, imaginary companions were used as therapeutic allies, to aid perspective-taking, and as a way to manage the intensity of interactions with clinicians. Imaginary companions were not therapeutically utilised by a sub-section of clinicians, owing to their perceived low salience, and to clinical risk issues. The findings are discussed in relation to existing theory and research, and methodological limitations, implications for clinical practice, and directions for future research are provided. Section C provides a critical appraisal of the research methodology and findings, and elaborates on clinical implications and future research ideas discussed in Section B.