Counterfactuals are contrary-to-fact statements that are widely used in daily life to convey thoughts about what might have been. Different from fact-based processing, successful counterfactual comprehension requires readers to keep in mind both suppositional information and presupposed fact. Using event-related potentials, the present study investigates how the process of establishing a coreferential relation (i.e., pronoun resolution) is influenced by counterfactual context, and whether it will be modulated by individual difference in literature reading. We compared the P600 (a positive-going deflection, which often reaches its peak around 600 milliseconds after presentation of the stimulus) effects elicited by gender-mismatched pronouns in three conditionals (causal vs. hypothetical vs. counterfactual) between two groups (literature exposure high- vs. low-level group). Results show that for low-level group, incongruent pronouns elicited robust P600 effects across all three conditionals, while for high-level group, the P600 effects were pronounced only in causal and hypothetical conditionals, but not in counterfactual conditionals. These findings suggest (a) different from causal and hypothetical conditionals, the dual meaning and pragmatic implications of counterfactuals may prompt people to go beyond here and now to elaborate their mental models and entertain alternative interpretations, and (b) substantial literature exposure would further enhance pragmatic inference of counterfactual context, leading high-level readers more inclined to elaborate discourse with possible alternative inferences, while leaving low-level readers habitually resort to more straightforward coreferential interpretation. (PsycINFO Database Record (c) 2019 APA, all rights reserved).