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Most analysts today continue to utilize Freud's early formulations of psychosis: 1, psychosis is initiated by a withdrawal of libidinal cathexis from external objects and a resultant hypercathexis of the self, or ego; 2, a secondary restitutive re-investment of objects occurs, resulting in delusions and hallucinations. The authors feel that neither of these assumptions is warranted and that structural theory concepts better explain the clinical phenomena. In regard to the decathexis of objects, they point out that many psychotic patients cling with abnormal intensity to infantile objects; certainly they are capable of intense transferences, albeit unstable and violent. Delusions of world destruction and salvation are seen as two sides of a conflict over guilt-laden aggressive impulses. Much of the symptomatology is best viewed as resulting from regressive alteration of ego function, in defense against overwhelming intrapsychic conflict. From a practical standpoint, this approach furnishes a clear rationale for therapy; to reduce intolerable anxiety and enhance the adaptive and integrative functions of the ego.