The Collaborative International Dictionary of English v.0.48:

Overstate \O`ver*state"\, v. t. [imp. & p. p. Overstated; p.
   pr. & vb. n. Overstating.]
   To state in too strong terms; to exaggerate. --Fuller.
   [1913 Webster]

WordNet (r) 3.0 (2006):

overstate
    v 1: to enlarge beyond bounds or the truth; "tended to
         romanticize and exaggerate this `gracious Old South'
         imagery" [syn: overstate, exaggerate, overdraw,
         hyperbolize, hyperbolise, magnify, amplify] [ant:
         downplay, minimise, minimize, understate]

Moby Thesaurus II by Grady Ward, 1.0:

84 Moby Thesaurus words for "overstate":
   aggrandize, amplify, ballyhoo, belie, blow up, build up, burlesque,
   camouflage, caricature, carry too far, color, disguise, distort,
   draw the longbow, dress up, embellish, embroider, enlarge,
   exaggerate, falsify, fudge, garble, gild, gloss, gloss over,
   go to extremes, hyperbolize, idealize, inflate, lay it on, magnify,
   make much of, mask, miscite, miscolor, misquote, misreport,
   misrepresent, misstate, misteach, overappraise, overassess,
   overcalculate, overcharge, overcount, overdo, overdraw,
   overemphasize, overesteem, overestimate, overmeasure, overpaint,
   overpraise, overprize, overrate, overreach, overreact,
   overreact to, overreckon, oversell, overspeak, overstress,
   overvalue, pad, parody, pervert, pile it on, puff, slant, strain,
   stretch, stretch the truth, talk big, talk in superlatives,
   titivate, tout, travesty, trick out, twist, understate, varnish,
   warp, whitewash, wrench