This paperargues for the development of the imagination experientially, pedagogically, and theoretically within the funds of identity approach. Our discussion is based on findings from a year-long ethnographic study of a Transnational Youth Radio project. The analysis centers on the case of 13-year old Muhammad in the context of his school-based Barcelona radio program. We present two examples from his case that illuminate the potential and challenges of using funds of identity in highly diverse learning contexts, how the imagination is implicated in these processes, and how educators can guide the imagination to support the expansion of the learning experience. The first example describes an event in which the use of an identity artifact involving religious affiliation gave rise to intercultural tension and the foreclosure of dialogue, due to lack of guidance of the imagination related to perspective-taking. The second example focuses on a group art project, in which the cultural experience guiding the collective imagination resulted in positive identity performances, perspective-taking, and interdependence. To conclude, we propose directions for future inquiry and the design of learning environments that can guide the development of the imagination within the funds of identity framework.