Buddhism includes an analysis of human psychology, emotion, cognition, behavior and motivation along with therapeutic practices. Buddhist psychology is embedded within the greater Buddhist ethical and philosophical system, and its psychological terminology is colored by ethical overtones. Buddhist psychology has two therapeutic goals: the healthy and virtuous life of a householder (samacariya, "harmonious living") and the ultimate goal of nirvana, the total cessation of dissatisfaction and suffering (dukkha).

Buddhism and the modern discipline of psychology have multiple parallels and points of overlap. This includes a descriptive phenomenology of mental states, emotions and behaviors as well as theories of perception and unconscious mental factors. Psychotherapists such as Erich Fromm have found in Buddhist enlightenment experiences (e.g. kensho) the potential for transformation, healing and finding existential meaning. Some contemporary mental-health practitioners such as Jon Kabat-Zinn find ancient Buddhist practices (such as the development of mindfulness) of empirically therapeutic value, while Buddhist teachers such as Jack Kornfield see Western psychology as providing complementary practices for Buddhists.

The establishment of Buddhism predates the field of psychology by over two millennia; thus, any assessment of Buddhism in terms of psychology is necessarily a modern invention. One of the first such assessments occurred when British Indologists started translating Buddhist texts from Pali and Sanskrit. The modern growth of Buddhism in the West and particularly the development of Buddhist modernism worldwide has led to the comparing and contrasting of European psychology and psychiatry with Buddhist theory and practice. According to Austrian psychologist Gerald Virtbauer, the contact of Buddhism and European Psychology has generally followed three main approaches:

The earliest Buddhist writings are preserved in three-part collections called Tipitaka (Pali; Skt. Tripitaka). The first part, the Sutta Pitaka contains a series of discourses attributed to the Buddha containing much psychological material.

A central feature of Buddhist psychology is its methodology which is based on personal experience through introspection and phenomenological self observation. According to the Buddha while initially unreliable, one's mind can be trained, calmed and cultivated so as to make introspection a refined and reliable method. This methodology is the foundation for the personal insight into the nature of the mind the Buddha is said to have achieved. While introspection is a key aspect of the Buddhist method; observation of a person's behavior is also important.

The early Buddhist texts outline a theory of perception and cognition based on the ayatanas (sense bases, sense media, sense spheres) which are categorized into sense organs, sense objects and awareness. The contact between these bases leads to a perceptual event as explained in Buddhist texts: "when the eye that is internal is intact and external visible forms come within its range and when there is an appropriate act of attention on the part of the mind, there is the emergence of perceptual consciousness."

The usual process of sense cognition is entangled with what the Buddha terms "papañca" (conceptual proliferation), a distortion and elaboration in the cognitive process of the raw sensation or feeling (vedana). This process of confabulation feeds back into the perceptual process itself. Therefore, perception for the Buddhists is not just based on the senses but also on our desires, interests and concepts and hence it is in a way unrealistic and misleading. The goal of Buddhist practice is then to remove these distractions and gain knowledge of things as they are (yatha-bhuta ñānadassanam).

This psycho-physical process is further linked with psychological craving, manas (conceit) and ditthi (dogmas, views). One of the most problematic views according to the Buddha, is the notion of a permanent and solid Self or 'pure ego'. This is because in early Buddhist psychology, there is no fixed self (atta; Sanskrit atman) but the delusion of self and clinging to a self concept affects all one's behaviors and leads to suffering. For the Buddha there is nothing uniform or substantial about a person, only a constantly changing stream of events or processes categorized under five categories called skandhas (heaps, aggregates), which includes the stream of consciousness (Vijñāna-sotam). False belief and attachment to an abiding ego-entity is at the root of most negative emotions.