The hindsight bias is the tendency for people to believe falsely that they would have predicted the outcome of an event, once the outcome is known. Although there is a rich literature on hindsight distortions, the underlying mechanisms are not yet fully understood. The present paper addresses the question of whether hindsight distortions represent the results of memory impairment or biased reconstruction processes. The majority of studies presented support the biased reconstruction view. Nevertheless, memory impairment processes cannot be ruled out as an explanation of hindsight bias when certain conditions are met, such as an existing coherent knowledge structure.