The tendency for people with high self-esteem to make inflated assessments and predictions about themselves carries the risk of making commitments that exceed capabilities, thus leading to failure. Ss chose their performance contingencies in a framework where larger rewards were linked to a greater risk of failure. In the absence of ego threat, Ss with high self-esteem showed superior self-regulation: They set appropriate goals and performed effectively. Ego threat, however, caused Ss with high self-esteem to set inappropriate, risky goals that were beyond their performance capabilities so they ended up with smaller rewards than Ss with low self-esteem. The results indicate the danger of letting egotistical illusions interfere with self-regulation processes.