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Historically, two paradigms have been dominant in clinical psychoanalysis: the classical paradigm, which views the impersonal analyst as objective mirror, and the interpersonal/relational model, which views the analyst as intersubjective participant-observer. An evolutionary shift in psychoanalytic consciousness has, however, been quietly taking place, giving rise to coparticipant inquiry, a third paradigm that integrates the individualistic emphasis of classical theory and the social focus of participant-observation, avoiding the reductionism of each. This new perspective, which is rooted in the radical teachings and clinical experiments of Sandor Ferenczi, represents a significant shift in analytic theory and has major clinical implications. This essay articulates the seven guiding principles of coparticipant inquiry and reviews its contribution to the psychoanalytic theory of therapeutic action. The curative process of reconstructive new experience in the analytic situation, referred to as the “living through” process, is seen to subtend curative change, for both patient and analyst. The inherent mutuality and bi-directionality of this beneficial “living through” process is examined in both its direct and its dialectic coparticipatory aspects.