The confusion of imagination with actual memories, or the formation of false memories, due to a psychological or neurological disorder.
Example: A patient describes in vivid detail a visit from her parents the previous day. You later discover that her parents have been dead for years.
This website provides a wonderful and very detailed description as well as the causes of this mental health issue: http://www.memorylossonline.com/glossary/confabulation.html
Last reviewed: By John M. Grohol, Psy.D. on 6 Aug 2010