The Collaborative International Dictionary of English v.0.48:

Exaggeration \Ex*ag`ger*a"tion\, n. [L. exaggeratio : cf. F.
   exag['e]ration.]
   1. The act of heaping or piling up. [Obs.] "Exaggeration of
      sand." --Sir M. Hale.
      [1913 Webster]

   2. The act of exaggerating; the act of doing or representing
      in an excessive manner; a going beyond the bounds of truth
      reason, or justice; a hyperbolical representation;
      hyperbole; overstatement.
      [1913 Webster]

            No need of an exaggeration of what they saw. --I.
                                                  Taylor.
      [1913 Webster]

   3. (Paint.) A representation of things beyond natural life,
      in expression, beauty, power, vigor.
      [1913 Webster]

WordNet (r) 3.0 (2006):

exaggeration
    n 1: extravagant exaggeration [syn: hyperbole, exaggeration]
    2: the act of making something more noticeable than usual; "the
       dance involved a deliberate exaggeration of his awkwardness"
    3: making to seem more important than it really is [syn:
       exaggeration, overstatement, magnification] [ant:
       understatement]

Moby Thesaurus II by Grady Ward, 1.0:

189 Moby Thesaurus words for "exaggeration":
   abandon, abstractionism, accelerando, acceleration, affectation,
   aggrandizement, aggravation, amplification, beefing-up, blague,
   blowing up, blowup, boundlessness, cock-and-bull story, coloring,
   command of language, concentration, condensation, confabulation,
   consolidation, deepening, deformation, distortion, egregiousness,
   embellishment, enhancement, enlargement, enormousness,
   equivocation, exacerbation, excess, excessiveness, exorbitance,
   exorbitancy, explosion, expression of ideas, expressionism,
   extravagance, extravagancy, extreme, extremes, extremism,
   extremity, fabulousness, fairy tale, false coloring,
   false swearing, falsehood, falsification, falsifying, falsity,
   farfetched story, farrago, fashion, feeling for words, fib,
   fiction, fish story, flam, flight of fancy, flimflam,
   form of speech, garbling, ghost story, giantism, gigantism,
   gluttony, grace of expression, grandiloquence, half-truth,
   heating-up, heightening, hyperbole, hypertrophy, immoderacy,
   immoderateness, immoderation, inaccuracy, incontinence, inflation,
   information explosion, injustice, inordinacy, inordinance,
   inordinateness, intemperance, intemperateness, intensification,
   inundation, legal fiction, lie, literary style, litotes,
   little white lie, magnification, manner, manner of speaking,
   mannerism, mendacity, miscoloring, misconstruction, misdrawing,
   mispainting, misquotation, misreport, misrepresentation,
   misstatement, misteaching, mode, mode of expression, monstrousness,
   nimiety, nonrealism, outrageousness, overappraisal, overassessment,
   overcalculation, overdevelopment, overdrawing, overestimate,
   overestimation, overflowing, overgreatness, overgrowth,
   overindulgence, overlargeness, overmuch, overmuchness, overpass,
   overrating, overreaction, overreckoning, overrun, overrunning,
   overspreading, overstatement, overvaluation, peculiarity, perjury,
   personal style, perversion, pickup, pious fiction,
   population explosion, prevarication, radicalism, redoubling,
   reinforcement, rhetoric, romance, sense of language, slanting,
   slight stretching, speedup, step-up, story, strain, straining,
   strengthening, stretching, style, stylistic analysis, stylistics,
   superiority, surplus, tale, tall story, tall tale, tall talk,
   taradiddle, the grand style, the plain style, the sublime,
   tightening, too much, too-muchness, trick, trumped-up story,
   twisting, unconscionableness, understatement, undueness,
   unreasonableness, unrestrainedness, untruth, vein, way, white lie,
   yarn