Freud's shift to the fantasy theory of neurosogenesis defined the investigation of intrapsychic life as our fundamental theoretical purview. In assigning to inner experience a data base for scientific exploration, there is reflected a central epistemological innovation which must profoundly alter the way we view what is real. This paper considers some of the continuing clinical challenges and farreaching implications posed by this shift to "psychic reality" as our core psychoanalytic theory.