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Embedded levels of illusion, common in the arts, are also frequently encountered in psychoanalytic work. Classical psychoanalysts, comparing nested frames of illusion to Prince Hamlet's play within a play, concluded that the function of the inner frame is to protect and disguise deeper truths. In this paper, I contrast this classical paradigm with more modern approaches, especially those drawing on the Winnicottian school. Through two case examples, I illustrate how a patient's opening an embedded frame of illusion (in one case a dream within a dream, in the other a book within a book) may represent a spontaneous gesture, which when adequately met by the analyst may facilitate working through a treatment impasse. In each of my case examples, the opening of the inner frame could be understood not only as protecting a deeper truth but also as the creation of a transitional, potential space in which paradox could be tolerated and play begin. After reviewing classical and Winnicottian approaches, I turn to a third interpretation of the use of the inner frame: when it functions as a mirror, a paradoxical situation is created in which inner and outer frames are blurred, so that what is experienced as most illusionary may simultaneously be experienced as most real. In this way the most private aspects of the self may be brought into the therapeutic field. In addition to my case examples, brief examples from the art of painting help to clarify these ideas.