The relationship between art, illusion and reality has been part of philosophical debate for centuries. With the increasing use of digital technologies in modern cinema, this debate entered a new dimension. This thesis aims to discuss the notion of illusions as a system of stories and values that inspire a culture similar to other grand narratives, such as mythology or religion. Cinema thus becomes the postmodern 'mythmaking machine' par excellence in a world that has increasing difficulties in creating unifying concepts and positive illusions that can inspire a culture and give hope. I will argue that illusions have always been a crucial element of culture, and my hypothesis is that they are not necessarily a sign of people's naivety or unconscious manipulationas has often been argued but a conscious choice, deriving from a longing for positive inspiration. This longing is particularly strong in times of ideological crisis, when other institutions fail to provide relief and guidance. This seems to be emphasised by the fact that in the last decade, at a time of deep ideological crisis, mainstream cinema has seen a significant revival of grand mythic epics. The thesis focuses on three key aspects: the area of belief, illusion and the creation of myths; the relationship between realism and illusion; and the possibilities of modern cinema in relation to these aspects. I chose to base my research project on continental philosophy rather than classic film theory or analytic philosophy in order to stimulate a new debate in film studies and philosophy that links traditional aesthetic concepts with contemporary thoughts on society and cinema. To begin with I draw on theories by Nietzsche, Kracauer and Deleuzeto unravel the interesting similarities in their works, such as the redemptive capacities of art and the acknowledgement that illusion/art/cinema is always closely related to the state of the society that produces them. This is then applied to recent Hollywood epics, namely The Lord of the Rings (P. Jackson, 2001-04), Troy(W. Petersen, 2004) and Avatar (J. Cameron, 2009). Here I argue that rather than being mere escapism, mainstream cinemacan have an important function in providing postmodern culture with important illusions, which is significantly facilitated by new digital technologies.The thesis concludes that these technologies present new creative opportunities for filmmakers and philosophers alike.