The functional role of counterfactual thoughts ("might have been" reconstructions of the past) was explored in three laboratory experiments. Specifically, counterfactual thoughts were posited to serve two possible functions: an affective function (feeling better) and a preparative function (preparing for the future via avoiding the recurrence of negative events). It is argued that counterfactuals as a generic class of cognitions generally serve these two functions, but that specific types of counterfactuals may in particular do so. Two dimensions are described alone which counterfactuals may be classified: direction (upward vs downward) and structure (additive vs subtractive). Upward counterfactuals focus on an alternative that is better than reality, whereas downward counterfactuals focus on an alternative that is worse than reality. Additive counterfactuals focus on the addition of antecedent elements that were not present in the past, whereas subtractive counterfactuals focus on the deletion of antecedent elements that were present in the past.;In all three experiments, these two variables are manipulated, forming, along with self-esteem, 2 x 2 x 2 factorial designs. In Experiment 1, subjects recalled negative life events, generated counterfactuals, and rated their current affect. Direction but not structure influenced affect ratings, such that downward counterfactuals resulted in more positive affect than upward counterfactuals. In Experiment 2, subjects recalled a disappointing examination performance, generated counterfactuals, rated their current affect, and rated their intentions to perform success-facilitating behaviours. Again, direction but not structure influenced affect rating in their same manner as in Experiment 1. Direction but not structure also influenced intention ratings, such that upward counterfactual generation resulted in stronger intentions to perform success-facilitating behaviours. In Experimental 3, subjects engaged in a computer-administered anagram task. Although the affective effects were not significant, both direction and structure influenced performance: upward as well as additive counterfactual generation resulted in greater improvement on the anagram task.;These findings provide initial support for a functional theory of counterfactual thinking: people may strategically use downward counterfactuals to make themselves feel better (an affective function), and they may strategically use upward and additive counterfactuals to improve performance in the future (a preparative function). The present studies suggest that the mechanism underlying the preparative function represents a causal link from counterfactuals to intentions to overt behaviours. Implications for current theory and future research are considered.