This chapter is a contribution toward understanding the difficulties of severely borderline patients as they are uncovered within the psychoanalytic process. We consider how the pattern of behavior and relationship—including the transference relationship—characteristics of borderline patients may be understood in terms of an inadequate integration of the two early modes of experiencing psychic reality, as elaborated in this chapter and summarized below. Specifically, we suggest that the borderline patient's failure to mentalize adequately is compounded by the persistence of an undifferentiated mode of representing external and internal experience. It is rooted in a childlike understanding of mental states, where feelings and ideas are construed as direct (or equivalent) representations of reality with consequent exaggeration of their importance and extension of their implications. The persistence of this mode of functioning is a self perpetuating consequence of the failure of mentalization. The experience of unconscious as well as conscious feelings and ideas as equivalent to physical reality inhibits individuals' capacity to suspend the immediacy of their experience and create the psychological space to "play with reality."