A review of the psychoanalytic literature shows that empathy has always played an important part in the practice of psychoanalysis, but that as a concept it has not been well understood. This confusion and a certain mistrust of empathy that it engenders were traced to an incomplete understanding of the meaning of the term, and to the lack of an affect theory that could explain the communication involved in the empathic process. These problems were examined and suggestions for their resolution were made. A line of affective development that culminated in empathic understanding was proposed. An operational approach to empathy was described and the role of empathy as the basis for and the prelude to psychoanalytic interpretation was discussed.