The identification of psychotic features in persons with mental retardation is challenging as the presence of hallucinations and delusions are disclosed through verbal self-report. In persons with mental retardation, self-report data is limited in utility because of the neuropsychological impairments that are uniformly reflected in limited communication and linguistic functions. Two major areas of misdiagnosis occur when interpreting reported hallucinations and delusions. First, the patient with mental retardation may experience a true hallucination or delusion, the content of which is very bizarre or disjointed, leading clinicians to identify schizophrenia or psychotic disorders when the condition is far less severe. Second, the patients's reported phenomena are not true hallucinations or delusions, but are instead self-talk, imaginary friends, or fantasy, similar to normal coping mechanisms of children. Mental health professionals must give priority to vegetative symptoms and mood states during the diagnostic assessment. It is also recommended that multiple sources of caregiver data be collected and that psychological projective testing be used as part of the evaluation process. Further, a false-positive strategy should be adopted when initiating treatment, favoring underdiagnosis of psychotic disorders.