We all rely on our senses to convey veridical information about the world around us, which we call “Reality”. However, distortions of reality in the form of hallucinations or illusions originating from neurological, psychiatric, pharmacological or psychological origins are prevalent. Thus, the sense of reality which is the ability to discriminate between true and false perceptions of the world, is a central criterion for neurological and psychiatric health. Despite the critical role of the sense of reality in our daily life, little is known about how this is formed in the mind and brain. The UnReal project explores the phenomenological, computational and neural processes underlying the Sense of Reality (SoR). We employ a specialized virtual reality environment allowing precise and controlled manipulations of visual reality across different domains. Using this VR platform, we are building a phenomenological and computational model of SoR. We will then use this framework to investigate the neural mechanisms underlying SoR by combining our VR paradigm with high resolution fMRI. Finally, we will investigate conditions of altered SoR, either of psychiatric origin or pharmacological origin. Here, we will test SoR under conditions of altered reality processing in schizophrenia patients with hallucinations and in a pharmacological model through administration of ketamine in healthy participants. This project will have important implications not only in defining a neurocognitive model of reality in healthy and clinical populations, but also shedding new light upon the fundamental philosophical question of “how do we know what is real?”.