The Collaborative International Dictionary of English v.0.48:

Exaggerate \Ex*ag"ger*ate\, v. t. [imp. & p. p. Exaggerated;
   p. pr. & vb. n. Exaggerating . ] [L. exaggeratus, p. p. of
   exaggerare to heap up; ex out + aggerare to heap up, fr.
   agger heap, aggerere to bring to; ad to + gerere to bear. See
   Jest. ]
   1. To heap up; to accumulate. [Obs.] "Earth exaggerated upon
      them [oaks and firs]." --Sir M. Hale.
      [1913 Webster]

   2. To amplify; to magnify; to enlarge beyond bounds or the
      truth; to delineate extravagantly; to overstate the truth
      concerning.
      [1913 Webster]

            A friend exaggerates a man's virtues. --Addison.
      [1913 Webster]

WordNet (r) 3.0 (2006):

exaggerate
    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]
    2: do something to an excessive degree; "He overdid it last
       night when he did 100 pushups" [syn: overdo, exaggerate]

Moby Thesaurus II by Grady Ward, 1.0:

149 Moby Thesaurus words for "exaggerate":
   accelerate, aggrandize, aggravate, amplify, ballyhoo,
   be untruthful, beef up, belie, blow up, build up, burlesque,
   camouflage, caricature, carry too far, color, complicate,
   concentrate, condense, consolidate, deceive, deepen, disguise,
   distort, double, draw the longbow, embellish, enhance, equivocate,
   exacerbate, exceed, exhaust, falsify, fib, fudge, garble,
   go beyond, go overboard, go to extremes, go too far, heat up,
   heighten, hop up, hot up, hyperbolize, idealize, intensify,
   jazz up, key up, know no bounds, lay it on, lie, lie flatly,
   magnify, make complex, make much of, miscolor, mislead, misquote,
   misreport, misrepresent, misstate, misteach, overact, overappraise,
   overassess, overcalculate, overcarry, overcharge, overcount,
   overdevelop, overdo, overdraw, overdrive, overelaborate,
   overemphasize, overesteem, overestimate, overexercise, overexert,
   overexpend, overgo, overindulge, overjump, overlabor, overleap,
   overmeasure, overpaint, overpass, overplay, overpraise, overprize,
   overrate, overreach, overreact, overreact to, overreckon, overrun,
   oversell, overshoot, overshoot the field, overshoot the mark,
   overspeak, overspend, overstate, overstep, overstrain, overstress,
   overstride, overstudy, overtask, overtax, overtrain, overuse,
   overvalue, overwork, pad, parody, pass all bounds, pervert,
   pile it on, prevaricate, protest too much, puff, ramify, redouble,
   reinforce, romance, romanticize, sharpen, slant, soup up,
   speak falsely, step up, story, strengthen, stretch,
   stretch the truth, superabound, talk big, talk in superlatives,
   tell a lie, tout, travesty, triple, twist, understate, warp, whet,
   wrench