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This article examines the relevance of relationally oriented psychoanalytic phenomenology as a frame of reference for understanding psychotic states in schizophrenia. The etiology and structural characteristics of such states are examined from both a neurophysiological, and a relational and interpersonal point of view. Many findings indicate organic abnormalities in schizophrenia, acquired through an exposure to physical risk factors and genetic predisposition, but relational traumas also seem to have an impact on the form and content of psychotic states. This may happen through interruptions in the “use-dependent” maturation of the brain in a relational milieu. In addition, at the level of meaning-making, we find that the emotional and relational contexts—both past and present—give the substance or “raw material” for hallucinations and delusions. In a psychotic state, the person also tries to handle basic affects and relational needs, and to make meaning in states of overwhelming chaos and anxiety. Donald W. Winnicott's theory of “a holding environment”, Stephen Mitchell's theory of the relational matrix, and Stolorow, Atwood, and Orange's concepts of a “shattered world” and annihilation anxiety are used as a framework in the analysis of the phenomenology of psychosis. Two case illustrations, one from child psychotherapy and one from therapy with an adult patient, are used to illuminate the theoretical points of view.