Freud's parents were both Jews, but not very observant ones. Although Freud grew up to be a dedicated atheist, Jewish culture remained deeply significant to him throughout his life. He took pride in being a Jew at the same time that he rejected the religious tenets of Judaism. For most of his life, Freud was an active member of the local chapter of the Jewish social society B'nai B'rith. Many of his supporters in psychoanalysis–especially in his early days in Vienna–were Jewish. Freud regarded it as a great triumph when the first non-Jewish psychiatrists–Eugen Bleuler, C. G. Jung, and their colleagues in Zurich–started practicing psychoanalysis in the early 1900s. Anti- Semitism limited Freud's opportunities for advancement and forced him to struggle for recognition and security. In the 1930s, anti-Semitism waxed in barbaric fashion with the ascendancy of National Socialism in Germany and Austria. This had a direct effect on Freud's life and work: it led to the flight of many psychoanalysts, including Freud, from Central Europe; the destruction of the publishing house and various psychoanalytic associations and clinics that had sprung up in Vienna, Berlin, Budapest, and elsewhere; and the resultant shift of psychoanalysis' center of gravity from Europe to the United States. Freud's last completed work, Moses and Monotheism (1938), explored Moses, the central figure of the Jewish tradition.

The id is entirely unconscious; it obeys the "pleasure principle" and wants to act on impulses and instincts. The ego is mostly conscious and partly unconscious; it obeys the "reality principle," interposing between the person and reality. The superego is also mostly conscious but partly unconscious; it is the internalization of society's restrictions on behavior. Repression is the method by which objectionable material in the conscious part of the ego and superego is made unconscious. Material which is not conscious at a particular moment but can be called easily into consciousness is sometimes referred to as "pre-conscious."

A "neurosis" is a mental illness that does not involve rejection of reality. It is caused, according to Freudian theory, by the partially successful repression of unwanted thoughts or desires, which leads to secondary symptoms such as depression, hysteria, and anxiety. "Libido" is psychic energy derived from the sex drive. It is "cathected" onto–that is, attached to or invested in–objects of desire. Libido that is inappropriately cathected can lead to neurosis. "Anal" and "oral" personality types are the result of libido being "fixated" (i.e. irrevocably cathected) at the anal and oral stages of psychosexual development. The "Oedipus complex" refers to the universal, but universally repressed, desire to sleep with one's mother and kill one's father. It derives its name from the Greek myth of Oedipus, who fulfilled a prophecy by unknowingly sleeping with his mother and killing his father. According to Freud, the unsuccessful repression of Oedipal desires is the main cause of neurosis in adult life.

Freud had a variety of influences on psychology, psychiatry, anthropology, history, and literary studies, but his most important contribution was probably the simple claim that many of our behaviors are motivated by unconscious, often unpleasant desires. Previous writers and thinkers had acknowledged that much of what we do is automatic and unconscious (such as the complex set of muscle movements needed to ride a bike). And the idea that people acted for reasons other than those they professed–even when they were telling the truth as they knew it–was hardly novel either. But there were three things that were strikingly novel about Freud's approach. The first was that he claimed, at least in his writings before the First World War, that there was only one basic drive worth mentioning: the drive for sex. Previous writers had always suggested that humans were motivated by a number of drives, including survival-oriented drives like sex, food, and safety, as well as "higher" drives like morality and the desire for positive social interactions. Freud, in contrast, linked every pathological behavior–and most non-pathological ones–to sex. The second innovation was that Freud pointed to forgotten childhood experiences as the crucial source of individual differences in character. Most previous writers had argued that genetic or inherited characteristics, or, at the opposite extreme, conscious attempts at self-control, were most important. The third novelty was that Freud hypothesized a complicated, systematic unconscious that was governed by the interaction between "beliefs" and "desires" in much the same way that the conscious mind was–except much more childishly. Together, these three precepts led to the theory that behavior is governed by the interaction between self, situation, and society, on the one hand, and powerful, unconscious, and usually sexual urges derived from childhood experience, on the other. This led to a conception of humans as egos struggling for control over their primitive ids and fooling themselves into thinking they had won the fight.