A hallmark of human thought is the ability to think about not just the actual world, but also about alternative ways the world could be. One way to study this contrast is through language. Language has grammatical devices for expressing possibilities and necessities, such as the words might or must. With these devices, called “modal expressions,” we can study the actual vs. possible contrast in a highly controlled way. While factual utterances such as “There is a monster under my bed” update the here-and-now of a discourse model, a modal version of this sentence, “There might be a monster under my bed,” displaces from the here-and-now and merely postulates a possibility. We used magnetoencephalography (MEG) to test whether the processes of discourse updating and modal displacement dissociate in the brain. Factual and modal utterances were embedded in short narratives, and across two experiments, factual expressions increased the measured activity over modal expressions. However, the localization of the increase appeared to depend on perspective: signal localizing in right temporo-parietal areas increased when updating others’ beliefs, while frontal medial areas seem sensitive to updating one’s own beliefs. The presence of modal displacement did not elevate MEG signal strength in any of our analyses. In sum, this study identifies potential neural signatures of the process by which facts get added to our mental representation of the world.Competing Interest StatementThe authors have declared no competing interest.