A narrator may be unrealiable because his or her credibility is compromised. Almost by definition, they are first-person narrators but there also cases of second- and third-person narrators who are unreliable.
Sometimes, this is really evident yet a more dramatic use of this device delays the revelation until the end of the story. For instance, near the end the reader can find out that the narrator has greatly misrepresented vital pieces of information. What is more, there are cases in which the narrator's unreliability is not fully revealed but only hinted at, leaving the readers asking themselves how much they can trust the narrator.
