This paper reconstructs Freud's theory of sexuality around a fundamental but largely unnoticed shift in the concept of libido. In Freud's earliest work, sexual somatic excitation and psychical libido are distinct. Libido is the affective form that excitation acquires when it enters into relations with ideas. I call all the consequences of this structure the first paradigm of libido. Between 1905 and 1915, under pressure from the theory of narcissism and the conflict with Jung, Freud gradually transformed libido into a distinct force whose sexual character belonged to psychical energy itself: the second paradigm. This shift relocated the explanation of psychical sexuality by placing sexual direction within psychical energy itself, but it also collapsed the gap between sexual origin and libidinal formation and made sexuality harder to distinguish from the distribution of libido. I claim that Laplanche's theory, despite creating admittedly original corrections to Freud's work, suffers the same problems as the second paradigm. The final section treats libidinal formation as the specifically psychoanalytic problem and develops an account in which bodily sexual excitation becomes affect, desire, and fantasy through incomplete binding, deferred reorganisation, and intersubjective mediation without recourse to the already-sexual unconscious of an adult.