The term 'unreliable narrator,' coined by Wayne Booth in 1961, was originally defined by a gap between a narrator's account and the norms implied by the work as a whole: a narrator is unreliable, in Booth's formulation, when he speaks or acts at variance with the implied author's values, whether or not the narrator is aware of the discrepancy. Later critics have extended the term well beyond Booth's original criterion, applying it to narrators whose factual claims are simply mistaken, narrators who withhold information, and narrators whose perceptions are altered by intoxication or mental illness, until 'unreliable' functions in much contemporary criticism as a loose synonym for 'not fully trustworthy' rather than as the precise technical category Booth intended.

This broadening has practical consequences for how the term gets used in classroom and review alike. When a critic calls a narrator unreliable without specifying which of these several senses is meant, a reader cannot tell whether the claim concerns the narrator's factual accuracy, moral perspective, or psychological state, three properties that a single narrator can possess in any combination; a narrator can be scrupulously honest about events while holding values the work clearly repudiates, or conversely can misjudge every fact while sharing the work's moral outlook entirely. Booth's original formulation kept these apart by tying unreliability specifically to value-discrepancy rather than to error or impairment.

Some recent theorists have proposed retiring the single term altogether in favor of separate labels for factual, moral, and perceptual unreliability, arguing that the collapsed usage obscures more than it reveals about how a given narrator actually functions. Others resist this proliferation of terminology on the grounds that readers rarely experience these three dimensions as cleanly separable while reading, whatever analytic clarity separating them might offer critics after the fact. The dispute remains unresolved, but it has at least clarified that the original, narrower sense of the term has been substantially displaced by looser usage in general circulation.