Illusion occupies a contested and generative position across the depth-psychology corpus, functioning simultaneously as epistemological problem, cosmological category, developmental necessity, and psychic actuality. The most sustained engagements appear in Sri Aurobindo’s extended critique of Advaitic Illusionism (Maya), where he interrogates whether the cosmic appearance constitutes an absolute falsity or a partial, evolving self-expression of Reality — a question he refuses to resolve in favour of simple negation. Campbell and Easwaran, drawing on Hindu and Buddhist sources, treat Maya as a dynamic feminine power with distinct veiling and projecting functions, granting illusion an ontological dignity beyond mere error. Jung intervenes decisively from the clinical side: for the psyche, he argues, ‘illusion’ is an epistemologically suspect category, since what consciousness dismisses as illusion may function as an indispensable psychic actuality. Winnicott relocates illusion within developmental psychology proper, identifying it as the inaugural space between subjective omnipotence and objective reality, without which no transition to the reality principle is possible. Kalsched, working at the intersection of trauma theory and analytic practice, distinguishes the ‘real’ from the ‘illusory’ relationship in the therapeutic dyad, marking both as simultaneously operative. Auerbach examines illusion’s literary mechanics in Don Quixote, illuminating how self-sustaining illusory systems collapse under the weight of unassimilable reality. Taken together, these voices refuse any simple dismissal of illusion as mere error, insisting instead on its structural role in consciousness, culture, cosmology, and psychic life.