Beginning with Freud's concept of psychic reality as the product of ex
ternal events and the patient's unconscious fantasies, the author sugg
ests that projective identification, as described by Klein, gives an a
ccount of how these two elements combine to produce one's psychic real
ity. The transference is an aspect of psychic reality that represents
a confusion between the patient and one of his of her objects-the anal
yst-brought about by projective identification. A clinical example ill
ustrates how the patient's transformation of the analyst's interpretat
ions through projective identification contributes to the transference
. Analysis of the transference in the analytic relationship allows pat
ients to experience their role in the formation of their experience of
the world, ''live'' and as it happens. This promotes the integration
of the patient's personality. The author compares this approach with o
ther approaches to the transference.