Picture Books with Unreliable Narrators/Narrative...

There's a Monster at the End of this Book is all that's springing to mind, but I don't read a lot of PBs.

May not be quite what you're looking for, but Dear Mrs. LaRue: Letters from Obedience School (Mark Teague) has essentially two stories: the black-and-white imaginings of the dog narrator, which match his overdramatic letters home, and color pictures showing the truth. It's the first of a series.

The last page of I Want My Hat Back (Jon Klassen) is a lie told by the narrator.

There was also a book about Cinderella, along the lines of The True Story Of The Three Little Pigs, from the perspective of the stepmother and stepsisters (pretty much accusing her of being an insipid little twit), but I can't remember the name or author offhand. (EDIT - Found it via Amazon: Seriously, Cinderella Is SO Annoying!: The Story of Cinderella as Told by the Wicked Stepmother (Trisha Speed Shaskan) Looks like it's part of a series called "The Other Side of the Story", but this is the only one I've seen personally.)

I keep thinking I've seen others, but my mind's drawing a blank right now...

Don't forget The Stinky Cheese Man and other Fairly Stupid Tales. One of my favorites when I was a kid.

A little bit up from picture books, though lavishly illustrated, but Gaiman's recent "Fortunately, the Milk" has a probably-not-reliable narrator in it.

I once pitched a picture book with an unreliable walrus and his pet radish (They fight crime!) but it never went anywhere. My feedback was--I kid you not--"I want more out of the radish."

I have never been able to adequately reply to that, and so have moved on to other things.

I think the narrator of Olivia could be taken as unreliable, at least if you compare the illustrations with realistic expectations.

There are a number of picture books that detail a kid's flights of fancy, but none are specifically coming to mind. There are also stories with lying as a theme. Oh, James Stevenson has a series in which a grandfather recounts his childhood adventures. They're essentially tall tales. He's unreliable. I love those books - Look for grandpa and Uncle Willie in the descriptions.