This is usually associated with Schizophrenia, as one of the main symptoms of Schizophrenia is psychosis. Psychosis refers to serious problems with thinking clearly and knowing what is real and what is not real. This can include hearing or seeing things that are not there (hallucinations) or having unusual beliefs that are abnormal or not true (delusions).
Psychosis can be treated effectively with medication (antipsychotic medication) and psychological treatment.