The question of how to place psychoanalysis in relation to science has been debated since the beginning of psychoanalysis and continues to this day. The author argues that psychoanalysis is best viewed as a form of applied art (also termed applied aesthetics) in parallel to medicine as applied science. This postulate draws on a functional definition of modernity as involving the differentiation of the value spheres of science, art, and religion. The validity criteria for each of the value spheres are discussed. Freud is examined, drawing on Habermas, and seen to have erred by claiming that the psychoanalytic method is a form of science. Implications for clinical and metapsychological issues in psychoanalysis are discussed.