In 20th century psychiatry, various disturbances of imagination were discussed in the context of schizophrenia. Today, these notions have almost completely vanished from mainstream psychopathology. However, recent work has suggested that specific phenomena within this area have a relevance for differential diagnosis and early detection of psychosis. This paper first provides an overview of 20th century psychopathological literature, as well as more recent neurocognitive studies, addressing disturbances of imagination and their role for symptom formation in schizophrenia. It then discusses recent empirical investigations of subjective anomalies of imagination in schizophrenia-spectrum disorders and suggests a clinical-phenomenological account of their role in the development of psychotic symptoms. Empirically and conceptually, these subjective anomalies are linked with disturbances of basic self. Patients' descriptions of the development of their anomalous experiences and symptoms indicate that increased spatial (object-like) articulation and instability of the first-personal manifestation of imaginative experience can be involved in the emergence of delusions and hallucinatory phenomena. Finally, a potential link between subjective anomalies of imagination and the neurocognitive construct of source monitoring deficits is discussed.