Self-regulation of intention formation is pivotal for achieving behavior change. Fantasy realization theory (Oettingen, 2000) assumes that mentally contrasting a desired positive future with present negative reality turns high expectations of success into strong intentions to realize the desired future, while indulging in the positive future fails to do so. The present study tests the theory’s process assumption that mental contrasting is a cognitively demanding, purposeful problem-solving strategy involving working and episodic memory, whereas indulging is a mindless daydreaming strategy involving the free flow of thought, by investigating the neural correlates of the two strategies via continuous magnetoencephalographic (MEG) activity. We observed greater activity during mental contrasting (but not indulging) compared to resting in prefrontal, frontal, parietal, and temporal areas, indicating that mental contrasting involves strong intention formation, working memory, and episodic memory. In addition, heightened activity of occipital areas was observed during mental contrasting compared to resting and indulging, suggesting that mental contrasting, more than indulging and resting, entails purposefully creating mental images. Taken together, these findings indicate that mental contrasting is indeed a purposeful problemsolving strategy based on past performance history, whereas indulging is a purposeless daydreaming strategy that is oblivious to past experiences.