A hallucination is when a language model generates text that is fluent and plausible but factually incorrect or fabricated — stating things that never happened, citing sources that do not exist, or mixing up details. Hallucinations occur because models optimize for likely next tokens, not truth. A legal assistant hallucinating case law could get a firm in serious trouble. Mitigation strategies include RAG grounding, fact-checking layers, temperature reduction, and human review of high-stakes outputs.