This paper examines several phenomena involving empathy, identification and blurring of self-boundaries. These phenomena which occur in dyads, families and large groups, cannot be explained by our standard individualistically-orientated psychoanalytic propositions. At the present state of our knowledge and theory formation, the concept of projective identification comes closest to delineating the complex inter-play of empathic and identificatory processes which transcend individual ego functioning and individualistic motivational formulations. It is proposed that these phenomena point to the need for a bimodal model of psychic function. The first is the classic or individual objective mode which is encompassed by our traditional dyadically derived body of knowledge. The second is the one developed in this paper, the Transpersonal mode.