Just be firm about it. When he tells you something that you know is an exaggeration, call him on it. Say "I know it is not that high, or that much. Now what really happened?" If he tells you the truth, then, praise him and show great pleasure in the story (to reinforce that the truth is cool enough; he doesn't have to exaggerate). Tell him that it is not okay to lie about something just to impress people, because lying is wrong, and if he keeps doing it people will learn not to believe him or trust him. Show disapproval when he lies, but if he is telling the truth, pay extra attention and pleasure in listening to him. If it keeps up, maybe think of a consequence.
I have a brother who was the same way, and it took a while for him to get it, but eventually he did. He did it to A: impress people, and B: ensure that he would get Mom/Dad's approval and pride. Unnecessary, and he quickly learned that exaggeration and lying got disapproval instead.
I hope this helps, and I will pray that your son learns quickly!
God bless!
M.