I argue that ordinary confabulation is a side-effect of an interpretive faculty that makes sense of the world by rationalising our experience within the context of a personal and cultural narrative. However, I argue that a hyperactivity of the same process manifests as schizotypy—latent schizophrenic tendencies—that can lead to extreme dissociation of interpretation from experience. I first give a phenomenological account of the process of interpretation, arguing that it is enacted through the creation of conceptual cognitive content from an originary (...) non-conceptual experience. I then ground this account in empirical evidence, showing how our direct perception is moulded and adapted as it is conceptualised to fit our individual and collective expectations. Finally, I argue that hyperactive over-interpretation results in schizotypic dissociation, thus suggesting that schizophrenia should be understood as a disorder of interpretation, the extreme end of a spectrum that includes ordinary confabulation. (shrink)