We present a new analytic study of the equilibrium and stability prope
rties of close binary systems containing polytropic components. Our me
thod is based on the use of ellipsoidal trial functions in an energy v
ariational principle. We consider both synchronized and nonsynchronize
d systems, constructing the compressible generalizations of the classi
cal Darwin and Darwin-Riemann configurations. Our method can be applie
d to a wide variety of binary models where the stellar masses, radii,
spins, entropies, and polytropic indices are all allowed to vary over
wide ranges and independently for each component. We find that both se
cular and dynamical instabilities can develop before a Roche limit or
contact is reached along a sequence of models with decreasing binary s
eparation. High incompressibility always makes a given binary system m
ore susceptible to these instabilities, but the dependence on the mass
ratio is more complicated. As simple applications, we construct model
s of double degenerate systems and of low-mass main-sequence star bina
ries. We also discuss the orbital evolution of close binary systems un
der the combined influence of fluid viscosity and secular angular mome
ntum losses from processes like gravitational radiation. We show that
the existence of global fluid instabilities can have a profound effect
on the terminal evolution of coalescing binaries. The validity of our
analytic solutions is examined by means of detailed comparisons with
the results of recent numerical fluid calculations in three dimensions
.