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Defense mechanism is a key concept in the psychoanalytic psychopathology of borderline personality disorder (BPD). Theoretical and empirical elaborations on this question are briefly reviewed and discussed with respect to process assessment of defense mechanisms; we put forward observer—rater methodology as an accurate means of assessing unconscious in-session processes. A sample of 25 patients presenting with BPD were interviewed, as were subjects from a matched control group without psychiatric symptoms (n = 25), using a psychodynamic interview paradigm. These interviews were transcribed and rated using the Defense Mechanisms Rating Scales. The results indicate that, compared to controls, patients with BPD used higher percentages of a action, borderline, disavowal, narcissistic, and hysteric defenses, along with lower levels of mature and obsessional defenses. Overall defensive functioning was significantly lower in the patients with BPD, compared to controls. Narcissistic defenses were related with symptom level. These results are discussed in light of previous studies on defensive functioning of BPD and the literature on psychoanalytic psychopathology. These results have several important clinical implications.