Existing psychological theories like Basking in Reflected Glory (BIRGing), social identity, and self-perception primarily explain how individuals derive self-worth from affiliations. This paper presents a comprehensive theoretical framework called the Illusory Shared Honor Effect (ISHE) - the illusory sense of shared honor resulting from perceived affiliation with a successful entity. ISHE functions as a psychological mechanism prompting individuals to perceive shared illusory honor despite its potential irrationality. Drawing from a wide range of social, cognitive, and motivational theories, this paper explores the antecedents, manifestation, and implications of ISHE across multiple contexts. This paper also illustrate how ISHE operates in real-life scenarios such as political affiliations, organizational success, and sports fandom. Moreover, this paper discusses both the positive and negative implications of ISHE, fostering a comprehensive understanding of the phenomenon. This paper concludes with potential directions for future research, highlighting the importance of empirical studies to further validate this theoretical framework.