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Imagination has been widely discussed in literature, literary criticism, philosophy, and psychology but has attracted limited attention among psychoanalysts and psychiatrists. However, imagination is a basic psychologic function, as basic as senseperception. After laying the ground by discussing the dialectics of sense-perception and imagination in everyday life, literature, psychology and philosophy, the author applies imagination as a core concept to the interpersonal processes in psychoanalysis and psychotherapy. Given that the person in psychoanalysis and psychotherapy reveals him- or herself via the exercise of free association, Freud's central methodologic contribution, the author then builds a bridge between imagination and free association, which are complementary processes. Furthermore, the traditional view of free association as limited to the analysand is then extended to include the free association of the analyst. The interaction between the free association and imagination in the analysand, reciprocated by the free association and imagination in the analyst, is called by the author reciprocal free association.