Within the past ten years, there has been a growing interest among American psychoanalysts in the work of Sandor Ferenczi and his followers, the so-called Budapest School. Several collections of essays on Ferenczi have appeared, while his correspondence with Freud and his Clinical Diary were finally published and translated. In this paper, I will give an overview of the historical importance of the Budapest School analysts, and then focus on three overlapping areas of their interest that have been and will continue to be particularly challenging. First, their exploration, stimulated by Ferenczi, of clairvoyance and telepathy, as these relate to the analytic situation, to transference and countertransference. Second, the mother-child dyad in the first year of life and the importance of trauma in early development. Third, the theory of psychosis.