One of Freud’s earliest discoveries was that in the unconscious, memories and phantasies are not distinguished – hence his abandonment of his earliest theory of neurosis, the ‘seduction’ or ‘affect trauma’ theory. From that time onwards phantasies have been of central interest. In this chapter I discuss the ideas of Freud and Klein regarding this interesting and complex concept. Throughout the discussion of their ideas about phantasy I refer briefly to the Controversial Discussions of the British Society in the 1940s in which the concept of phantasy played a central role. I then describe certain more recent but minor changes in the Kleinian use of the concept. The chapter ends with brief conjectures about the use of the concept in other current schools of psychoanalysis.