This paper is concerned with the problems raised by the occurrence in both waking and dream life of anxiety accompanied by genital excitement. This combination, which can be seen in anxiety and punishment dreams, beating and other sadomasochistic phantasies, examination dreams, stage fright, etc., is traced by the author to a repressed, incestuous, sexual drive which has been activated by sexual frustration or by some stimulus, which by association has become connected with repressed sexuality. The ego in such circumstances may use anxiety as a partial defence and act as if it wished and accepted punishment, even though it is more or less aware of the underlying sexual impulse. The tension between ego and super-ego is perceived as both painful and pleasurable, libido and anxiety co-existing. 'It is, in other words, a hypocritical as if state in which the ego perceives anxiety on one level and lust on another.'