Abstract The invention of imaginary worlds (“paracosms”) is a creative activity of middle childhood that has previously been investigated primarily with retrospective adult reports and biographical accounts. In descriptions collected from 8- to 12-year-old children, the prevalence was 16.9% in Study 1 (n = 77) and 17.4% in Study 2 (n = 92). Children with and without paracosms did not differ in verbal comprehension, divergent thinking (Studies 1 and 2) or working memory (Study 2). However, children with paracosms had more difficulty with inhibitory control (Study 2) and had higher creativity scores on a story-telling task (Studies 1 and 2). Paracosms provided a vehicle for stories associated with imaginary companions and/or for developing complex narratives alone or with friends.