Upward and downward counterfactuals serve the distinct motivational functions of self-improvement and self-enhancement, respectively. Drawing on construal level theory, which contends that increasing psychological distance from an event leads people to focus on high-level, self-improvement versus low-level, self-enhancement goals, we propose that distance will alter counterfactual direction in a way that satisfies these distinct motives. We found that people generated more downward counterfactuals about recent versus distant past events, while they tended to generate more upward counterfactuals about distant versus recent past events (Experiment 1). Consistent results were obtained for social distance (Experiment 2). Experiment 3 demonstrated that distance affects the direction of open-ended counterfactual thoughts. Finally, Experiment 4 explored a potential mechanism, demonstrating that manipulating temporal distance produced changes in participants’ self-improvement versus self-enhancement motivations when responding to negative events. Future directions and broader implications for self-control, social support, empathy, and learning are discussed.