Exaggeration, or hyperbole, has a long and important history in the information systems community, and it continues to be an essential part of the challenge managers face, as they pursue organizational opportunity and change through the application of information technology. Although commonly maligned as a tool of technology promoters and as a companion to fads or crazes, exaggeration appears to play an important, if ambiguous, role in the communication and diffusion of major information technology (IT) innovations. This paper takes some initial steps toward developing a theory of exaggeration in the information systems domain. Exaggeration is situated in the larger context defined by the roles that discourse and rhetoric in interorganizational fields play in the social construction and dissemination of IT innovations. Exaggeration, then, is seen to enter at points defined by the knowledge requirements of organizations. Different species of exaggeration emerge within the larger innovation discourse in connection with organizations' need to ascertain the know what, know why, know where, know when, and know how of the innovation. This preliminary effort to develop taxonomy and to outline a functional theory of exaggeration is complemented by calls for further theorizing that would embrace process issues.