Psychonarratology is an approach to the empirical study of literary response and the processing of narrative. It draws on the empirical methodology of cognitive psychology and discourse processing as well as the theoretical insights and conceptual analysis of literary studies, particularly narratology. The present work provides a conceptual and empirical basis for this interdisciplinary approach that is accessible to researchers from either disciplinary background. An integrative review is presented of the classic problems in narratology: the status of the narrator, events and plot, characters and characterization, speech and thought, and focalization. For each area, Bortolussi and Dixon critique the state of the art in narratology and literary studies, discuss relevant work in cognitive psychology, and provide a new analytical framework based on the insight that readers treat the narrator as a conversational participant. Empirical evidence is presented on each problem, much of it previously unpublished.