This chapter describes the differentiation process and focuses on the characteristics of psychologically healthy individuals, with the discussion being organized around the concept of differentiation of self. More than any other psychological concept, differentiation of self captures the elements and characteristics associated with the healthy psychological functioning that occurs when we embrace our Real Self. These characteristics include: healthy interpersonal boundaries, low levels of emotional reactivity, balanced ownership of responsibility, balance of thoughts and emotions, inner-generated convictions, ability to self-soothe, direct communication, adult-to-adult relationships with parents, personal authority, and personal integrity.