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The problem of latent psychosis is discussed from three points of view. (1) Diagnostic: several groups can be delineated which may hide a latent psychosis, e.g. neurosis, perversion, addiction, psychopathy, etc. Descriptive data are inadequate to confirm a diagnosis. Further clarification can be obtained from (a) clinical observation in the therapeutic situation. (b) Psychological testing; some of the problems arising with these methods are discussed. (2) Dynamic structure of the latent psychosis: In the course of early development the splitting mechanism comes into action so that early ego states remain untouched under the cover of later ego formations. These archaic ego constellations form psychotic nuclei which under environmental stress contribute to a breakdown of ego defences with a resulting break with reality. A case report illustrates this thesis. (3) Therapy of latent psychosis: the precipitation of a florid psychosis as a result of psycho-analytic therapy is no longer excusable. Therapy must be flexible. Only periodically can it be conducted as with a psychoneurotic patient. Modifications aimed at protecting and strengthening the ego must be introduced. Problems of technique are discussed.