Fictionality and fictional experiences are ubiquitous in people’s everyday lives in the forms of movies, novels, video games, pretense and role playing, and digital technology use. Despite this ubiquity, though, the field of cognitive science has traditionally been dominated by a focus on the real world. Based on the limited understanding from previous research on questions regarding fictional information and the cognitive processes for distinguishing reality from fiction, we argue for the need for a comprehensive and systematic account that reflects on related phenomena, such as narrative comprehension or imagination embedded into general theories of cognition. This is important as incorporating cognitive processing of fictional events into memory theory reshapes the conceptual map of human memory. In this paper, we highlight future challenges for the cognitive studies of fictionality on conceptual, neurological, and computational levels. Taking on these challenges requires an interdisciplinary approach between fields like developmental psychology, philosophy, and the study of narrative comprehension. Our aim is to build on such interdisciplinarity and provide conclusions on the ways in which new theoretical frameworks of fiction cognition can aid understanding human behaviors in a wide range of aspects of people’s daily lives, media consumption habits, and digital encounters. Our account also has the potential to inform technological innovations related to training intelligent digital systems to distinguish fact and fiction in the source material.