Aesthetic illusion is one of many terms available for describing the experience of engaging with fiction. This chapter argues that aesthetic illusion has important qualities lacking in alternative terms – above all, it reminds us that reading experiences are more complex than just ‘immersion’, ‘absorption’, or ‘transportation’. Despite this potential, however, aesthetic illusion is flawed in ways that, taken together, prove fatal: in the core concepts of illusion and the aesthetic; in associated notions like quasi-experience and rational distance; and in questions of its typicality and its relation to phenomena like immersion. After a theoretical critique, the chapter presents empirical evidence, from a survey on fiction-reading and mental health (specifically eating disorders), to help adjudicate between aesthetic illusion and its competitors, and to explore both the therapeutic relevance of aesthetic illusion and the cases where its basic structure (emotional engagement versus rational distance) proves not only conceptually but ethically inadequate.