The present research extends previous functional accounts of counterfactual thinking by incorporating the notion of reflective and evaluative processing. Participants generated counterfactuals about their anagram performance, after which their persistence and performance on a second set of anagrams was measured. Evaluative processing of upward counterfactuals elicited a larger increase in persistence and better performance than did reflective processing of upward counterfactuals, whereas reflective processing of downward counterfactuals elicited a larger increase in persistence and better performance than did evaluative processing of (...) downward counterfactuals. Moreover, path analyses indicated that whereas the relationship between counterfactual thinking and persistence was accounted for by emotional responses following upward and downward counterfactual generation, the relationship between counterfactual thinking and performance was accounted for by enhanced persistence following reflective processing of downward counterfactuals, but was accounted for by both enhanced persistence and strategic thinking following evaluative processing of upward counterfactuals. (shrink)