Imagination seems to play an epistemic role in philosophical and scientific thought experiments, mindreading, and ordinary practical deliberations insofar as it generates new knowledge of contingent facts about the world. However, it also seems that imagination is limited to creative generation of ideas. Sometimes we imagine fanciful ideas that depart freely from reality. The conjunction of these claims is what I call the puzzle of knowledge through imagination. This chapter aims to resolve this puzzle. I argue that imagination has an epistemic role to play, but it is limited to the context of discovery. Imagination generates ideas, but other cognitive capacities must be employed to evaluate these ideas in order for them to count as knowledge. Consideration of the Simulation Theory's so-called "threat of collapse” provides further evidence that imagination does not, on its own, yield new knowledge of contingent facts, and it suggests a way to supplement imagination in order to get such knowledge.