Psychoanalysis presumes that there are basic instincts--sex and aggression--that provide the motivating force behind behavior. These instincts are generated and regulated by different structures within the mind: the id, the ego, and the superego. The transfer of instinctual energy from one structure to another, and toward or away from objects in the world, is a dynamic, continual process. Psychoanalysis is thus the prime example of a psychodynamic theory.

The basic instincts in psychoanalysis are sex and death (or aggression), also known as Eros and Thanatos. The sex drive is far and away the most important drive in Freud's theory, although it plays a smaller role in many of the later psychodynamic theories. The libido is sexual energy; each person has a limited amount that can be apportioned to various goals, processes, and objects in the person's mental life. In English translations of Freud, the process of attaching libido to an object is called cathexis. According to Freud, once a certain amount of libido is "cathected" onto a particular object or class of objects (e.g. shoes, for a shoe fetishist), that libido can no longer be used to drive other kinds of behaviors (e.g. "normal" love).

Sex and death are the basic instincts behind behavior, but the actual expression of these instincts is controlled by three intertwined mental structures: the id, the ego, and the superego. The id is the most fundamental structure; it is the earliest to develop and it is the source of the sex and death drives. The id obeys the pleasure principle; that is, it seeks to immediately satisfy its desires with any means available. The ego develops out of the id due to experience with the world. It obeys the reality principle, that is, it recognizes that it cannot immediately satisfy all of its desires because of real-world constraints. Finally, the superego develops during the course of development when the individual is exposed to social demands. The superego arises, according to Freud, from a child's internalization of the parents' value systems. Any given adult behavior is thus the product of the activity of the interaction of the id (pleasure principle), ego (reality principle), and superego (social constraints).

Although not one of the main emphases of Freud's theory, the concept of ego defenses is one of the most important legacies of Freudian thought. Freud's daughter Anna Freud developed the idea most thoroughly. She argued that the ego has a number of ways in which it can control the id's urges. Some of these methods are as follows, with typical psychoanalytic examples in parentheses: repression, in which the ego pushes the id's desires back into the unconscious (e.g. repressing the urge to kill one's father); displacement, in which drives toward an inappropriate object are re-directed towards an object that is somehow symbolic of the inappropriate object (e.g. smoking a cigarette instead of sucking on the mother's breast); sublimation, a kind of displacement in which a drive is directed towards a goal that is in line with the ideals of the superego (e.g. painting a masterpiece instead of having sex with one's mother); reaction formation, in which a drive is replaced by its opposite (e.g. loving one's father instead of hating him); projection, in which a person attributes a drive of their own to another person (e.g. claiming your father wants to kill you when in reality you want to kill your father); and rationalization, in which the ego generates fallacious reasons to explain the id's urges (e.g. explaining an urge to kill one's father by pointing to his bad temper, instead of the real reason--fear of castration).