In this chapter, the author examines the “Two principles” paper within the framework of S. Freud’s concurrent writings. Ever reworking and expanding on his theories, Freud elaborated his ideas about primary process thinking by introducing the concepts of the pleasure and reality principles. With regard to thinking, Freud in “Two principles” wrote about thinking as experimental action, thereby drawing a link between action and thinking that continue to be an important topic in psychoanalytic theories. The author considers the place of “Two principles” in the relationship between Freud and Jung and their respective views on the nature of psychosis. He discusses how Klein and Wilfred Bion henceforth became the “heir” to Freud’s unfinished work on the nature of psychosis. During the last months of 1910, Freud found himself tacking back and forth between the writing of “Formulations regarding two principles in mental functioning” and his longer paper on the Schreber case.