Hallucinations remains one of the most intriguing phenomena in psychopathology. In the past two decades the advent of neuroimaging techniques have allowed researchers to investigate what is happening in the brain of those who experience hallucinations. In this article we review both structural and functional neuroimaging studies of patients with auditory and visual hallucinations as well as a small number of studies that have assessed cognitive processes associated with hallucinations in healthy volunteers. The current literature suggests that in addition to secondary (and occasionally primary) sensory cortices, dysfunction in prefrontal premotor, cingulate, subcortical and cerebellar regions also seem to contribute to hallucinatory experiences. Based on the findings of these studies we tentatively propose a neurocognitive model in which both bottom-up and top-down processes interact to produce these erroneous percepts. Finally, directions for future work are discussed.