To show the development of his thinking, an appendix in later editions also includes original versions of the essays "New Paths in Psychology" (1912) and "The Structure of the Unconscious" (1916)—both of which were discovered after Jung's death.

Next Jung looks at the problem of transference in the therapeutic context and posits that there is more than infantile personal unconscious content being projected: there are archetypal patterns of behavior and fantasy imagery.

Jung elaborates on his theories by going through some examples of his method of dream interpretation, and amplifying the material provided by connecting it with archetypal figures such as the shadow, the magician/wise old man, and the hero undertaking the night sea journey.

This section includes:[1] Jung gives some examples of how consciousness becomes "inflated," which he defines as "an extension of the personality beyond individual limits, in other words, a state of being puffed up."

Different suboptimal resolutions to this crisis are explored, including a "regressive restoration of the persona," which is a retreat to a mode of being that one has already outgrown and an avoidance of future growth and risk.

The individuation process involves allowing the unconscious to communicate with consciousness, and one main channel by which that happens is through a dream figure that is contra-sexual to the ego.