The neural circuits activated in a person carrying out actions, expressing emotions, and experiencing sensations are activated also, automatically via a mirror neuron system, in the observer of those actions, emotions, and sensations. It is proposed that this finding of shared activation suggests a functional mechanism of “embodied simulation” that consists of the automatic, unconscious, and noninferential simulation in the observer of actions, emotions, and sensations carried out and experienced by the observed. It is proposed also that the shared neural activation pattern and the accompanying embodied simulation constitute a fundamental biological basis for understanding another's mind. The implications of this perspective for psychoanalysis are discussed, particularly regarding unconscious communication, projective identification, attunement, empathy, autism, therapeutic action, and transference-countertransference interactions.