Hallucinations may be manifested in a variety of forms. Various forms of hallucinations affect different senses, sometimes occurring simultaneously, creating multiple sensory hallucinations for those experiencing them.

A hallucination is a perception in the absence of external stimulus that has qualities of real perception. Hallucinations are vivid, substantial, and are perceived to be located in external objective space. They are distinguishable from several related phenomena, such as dreaming, which does not involve wakefulness; pseudohallucination, which does not mimic real perception, and is accurately perceived as unreal; illusion, which involves distorted or misinterpreted real perception; and imagery, which does not mimic real perception and is under voluntary control. Hallucinations also differ from "delusional perceptions", in which a correctly sensed and interpreted stimulus (i.e., a real perception) is given some additional (and typically absurd) significance.

Hallucinations can occur in any sensory modality—visual, auditory, olfactory, gustatory, tactile, proprioceptive, equilibrioceptive, nociceptive, thermoceptive and chronoceptive.

A mild form of hallucination is known as a "disturbance", and can occur in most of the senses above. These may be things like seeing movement in peripheral vision, or hearing faint noises and/or voices. Auditory hallucinations are very common in schizophrenia. They may be benevolent (telling the subject good things about themselves) or malicious, cursing the subject, etc. Auditory hallucinations of the malicious type are frequently heard, for example people talking about the subject behind his/her back. Like auditory hallucinations, the source of the visual counterpart can also be behind the subject's back. Their visual counterpart is the feeling of being looked or stared at, usually with malicious intent. Frequently, auditory hallucinations and their visual counterpart are experienced by the subject together.

Hypnagogic hallucinations and hypnopompic hallucinations are considered normal phenomena. Hypnagogic hallucinations can occur as one is falling asleep and hypnopompic hallucinations occur when one is waking up. Hallucinations can be associated with drug use (particularly deliriants), sleep deprivation, psychosis, neurological disorders, and delirium tremens.

The word "hallucination" itself was introduced into the English language by the 17th century physician Sir Thomas Browne in 1646 from the derivation of the Latin word "alucinari" meaning to wander in the mind. For Browne, hallucination means a sort of vision that is "depraved and receive[s] its objects erroneously".

A pseudohallucination is an involuntary sensory experience vivid enough to be regarded as a hallucination, but recognised by the patient not to be the result of external stimuli. Unlike normal hallucinations, which occurs when one sees, hears, smells, tastes or feels something that is not there, with a compelling feeling or thought that it is real, pseudohallucinations are recognised by the person as unreal.

In other words, it is a hallucination that is recognized as a hallucination, as opposed to a "normal" hallucination which would be perceived as real. An example used in psychiatry is the hearing of voices which are "inside the head" according to the patient; in contrast, a hallucination would be indistinguishable to the patient from a real external stimulus, e.g. "people were talking about me".

The term is not widely used in the psychiatric and medical fields, as it is considered ambiguous; the term "nonpsychotic hallucination" is preferred. Pseudohallucinations, then, are more likely to happen with a hallucinogenic drug. But "the current understanding of pseudohallucinations is mostly based on the work of Karl Jaspers".

A further distinction is sometimes made between pseudohallucinations and "parahallucinations", the latter being a result of damage to the peripheral nervous system.

They are considered a feature of conversion disorder, somatization disorder, and dissociative disorders. Also, pseudohallucinations can occur in people with visual/hearing loss, with the typical such type being Charles Bonnet syndrome.