Psychodynamic psychotherapy (also known as "psychoanalytic" or "dynamic" psychotherapy) is based on the premise that the past significantly shapes the present. This therapeutic model emphasizes, in particular, early life developmental stages. According to psychodynamic therapy, the way an individual solves relationship issues early on can profoundly impact the formation of that individual's adult personality.

At any previous life stage, a person may have become "stuck" in a way of reacting or problem solving that is not all that adaptive or effective. As an adult, these same limiting patterns often play out, time and again, automatically and reflexively. These "hidden" patterns may interfere with the client's ability to have intimate relationships with others, bounce back from rejection or sustain physical health. Similarly, unresolved development issues can prevent the individual from fully and spontaneously experiencing his true feelings or realize a satisfying, successful career. These patterns are often quite subtle in their effect. Despite an individual's relatively mature exterior and ability to function quite successfully in most areas of her life, she may nonetheless be unknowingly constricting opportunities for personal growth and resisting living a more dynamic, passionate life.

Clients are encouraged to talk freely about conflicts, past and present, and to discuss spontaneous feelings and thoughts that arise toward the therapist (a process known as transference). Oftentimes, the client realizes that she tends to replay past struggles in the present moment, reflexively displacing unfinished business with her parents, for example, onto her therapist, employer or spouse. In essence, the psychodynamic therapy session creates a safe microcosm of the client's daily life, allowing the client to re-examine and experiment with "leftover" feelings without acting them out in a self-defeating way. Another important tool used in psychodynamic psychotherapy is dreamwork. This technique involves discussing and interpreting the client's dream material in order to bring hidden aspects of the unconscious mind into consciousness.

Although there is no prescribed length for this treatment approach, psychodynamic psychotherapy is usually of longer duration than other types of therapy. As this treatment goes deeper into the core of the patient's psyche, more time investment is typically necessary. The profound gains made in psychodynamic psychotherapy are typically more permanent and long lasting than other shorter duration approaches, meaning that familiar problems may be less likely to resurface later in life. Psychodynamic treatment is arguably the treatment of choice for already high-functioning clients who desire to know themselves deeply, "from the inside out," and take greater personal responsibility for their lives and daily experience. In exploring the deepest layers of personality formed in early childhood, this treatment also addresses deeper existential issues relating to death, grief, life meaning and loss.

Psychodynamic treatment may be effectively applied to a variety of common issues, and is often utilized in individual, couples and family psychotherapy.