Stories transport readers into vivid imaginative worlds, but understanding how readers create such worlds-populating them with characters, objects, and events-presents serious challenges across disciplines. Auditory imagery is thought to play a prominent role in this process, especially when representing characters' voices. Previous research has shown that direct reference to speech in stories (e.g., He said, "I'm over here") may prompt spontaneous activation of voice-selective auditory cortex more than indirect speech [Yao, B., Belin, P., & Scheepers, C. Silent reading of direct versus indirect speech activates voice-selective areas in the auditory cortex. Journal of Cognitive Neuroscience, 23, 3146-3152, 2011]. However, it is unclear whether this effect reflects differential processing of speech or differences in linguistic content, source memory, or grammar. One way to test this is to compare direct reference effects for characters speaking and thinking in a story. Here, we present a multidisciplinary fMRI study of 21 readers' responses to characters' speech and thoughts during silent reading of short fictional stories. Activations relating to direct and indirect references were compared for both speaking and thinking. Eye-tracking and independent localizer tasks (auditory cortex and theory of mind [ToM]) established ROIs in which responses to stories could be tracked for individuals. Evidence of elevated auditory cortex responses to direct speech over indirect speech was observed, replicating previously reported effects; no reference effect was observed for thoughts. Moreover, a direct reference effect specific to speech was also evident in regions previously associated with inferring intentions from communication. Implications are discussed for the spontaneous representation of fictional characters and the potential roles of inner speech and ToM in this process.