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A previous paper sought to establish Jung as a psychoanalytic pioneer and as more in the mainstream of psychodynamic thought than is usually believed. However, this paper examines an interest of Jung's which may be considered to have brought him into disrepute—alchemy. Jung proposed alchemical imagery as a metaphor for transference–countertransference processes in analysis. The paper begins by demonstrating the ubiquity of alchemical imagery in psychological discourse and also the centrality of metaphor as a means of perception and expression. Then Jung's theories about alchemy are detailed, together with his linking of interpersonal relationship and the 'hidden mystery of life'. Alchemy's terms and principles are shown to have a relevance for clinical practice. An interactional mode of analysis is introduced and discussed. Psychoanalysis and analytical psychology have shared in a general re-evaluation of non-neurotic countertransference as having a positive use in analysis. The illustrations to Jung's 'The psychology of the transference' demonstrate the importance of sexual imagery and its symbolic use to illuminate psychological process. This leads to a re-consideration of the role of erotic involvement in analysis. Research data is introduced which highlights the part played in non-neurotic countertransference by the analyst's body. A hypothesis about this is illustrated by clinical material. The paper concludes with some reflections about the practice of analysis.