Because a significant part of individuals' lives involve close relationships, an important and substantial part of the situations they encounter consists of other people's behaviors. We suggest that individuals' characteristic ways of behaving, which are typically attributed to "personality," arise from two processes. One lies primarily within the individual, conceptualized as individual differences in one's cognitive and affective processing system. The other process, which has received less attention in personality research, lies outside the person in the individual differences in the situations that people encounter in their everyday lives. The interplay between these two processes can be particularly relevant for understanding close relationships. By assuming that each partner's behavior provides the situational context for the other partner, we conceptualize a dyadic relationship as the "interlocking" of the cognitive-affective processing systems of both partners. We illustrate this approach to personality-in-context with a hypothetical scenario and use this framework to organize research on attachment styles, rejection sensitivity, self-fulfilling prophecy, the self in relation to others, and interdependence theory.