When 4- and 6-year-olds are cued to use their imagination, they can overcome the belief bias effect and demonstrate deductive reasoning ability on syllogisms containing contrary-to-fact material. This study tested whether 2- and 3-year-olds could also reason with incongruent syllogisms when encouraged to use their imagination. Eighty-four 2-, 3- and 4-year-olds were randomly assigned to one of four conditions: no cue, word cue, fantasy planet or imagery. Children were then presented with six syllogistic reasoning problems containing incongruent information. In the imagination conditions, 2- and 3-year-olds performed as competently as 4-year-olds. The findings are discussed in relation to other research which suggests that under certain circumstances 2- and 3-year-olds have the capacity for counterfactual thinking.