Understanding imagination as both a cognitive and affective endeavor is crucial in order for educators to promote creative and imaginative thinking in informal and formal learning environments. It is the primary aim of this paper to develop the theoretical discussion of Vygotsky's writings on young children's imaginative abilities launched by Gajdamaschko ("Teach Educ" 16(1):13-22, 2005) and Lindqvist ("Res J" 15(2&3):245-251, 2003). This paper illustrates Vygotsky's writings on the cognitive processes involved in children's imagination and creativity and concludes with a discussion focused on the components of an educational environment that can either support or stifle children's imaginative abilities. It is through this continuing discussion that, as researchers, we hope to extend and challenge current conceptions of the role of imaginative thinking in early education.