The authors review the research on children's imagination and fantasy as they relate to children's socio-emotional and cognitive development and link those findings to children's academic and classroom competence. Specifically, children who are imaginative and/or fantasy prone tend to have better coping skills and the ability to regulate their emotions as well as score well on measures related to thinking, logic, and communication. Provided in this paper are also both conceptual and applied suggestions for teachers about how and why they should encourage imagination and fantasy in their classrooms. Concluding the paper are practical suggestions for activities and curriculum that use imagination and fantasy to enhance children's academic experiences and competence.