Marxist social theory and, in particular, Marxist notions of ideology have never been popular within psychology. Recently, however, the Marxist notion of false consciousness has begun to make appearances in mainstream psychological journals. In this paper I argue that this notion has been misappropriated by those who construct it simply as a psychological-cognitive phenomenon located in individuals’ heads, rather than as a socially emergent product of a capitalist society. A cognitive construction of false consciousness by social psychologists is no surprise given the dominance of social cognition as a research tradition within psychology: a tradition which has always emphasized the limited and faulty cognitive capacities of the individual and one which sits comfortably with a highly individualized and psychological account of false consciousness. The inherent epistemological difficulties in maintaining the notion of false consciousness within contemporary social theory are discussed. Despite these difficulties, it is argued that the notion of false consciousness remains a useful theoretical construct, not as a psychological and cognitive affliction suffered by the ‘less enlightened’, but as a phenomenon grounded in social reality itself: in particular, the material reality of late capitalism and postmodern culture.