In the next section, this paper offers a brief historical perspective on this hypothesis to better illustrate how this hypothesis is similar and how it is different from other hypotheses. Following that, this paper then explores the explanatory power of this new hypothesis. Next, this paper addresses the traditional, biological model of psychosis. Included in this section is a novel way to understand the efficacy of antipsychotics and a discussion of the predispositions to psychosis. In the following section, this paper examines the supporting evidence for the hypothesis that psychosis often is a mechanism for coping with existential distress – such as studies of individuals who have fully recovered from psychosis. After the evidence for this hypothesis, this paper discusses some limitations of this theoretical perspective. Finally, this paper summarizes the implications of the research discussed herein and offers suggestions for further research.