In literary criticism, stream of consciousness is a narrative mode or method that attempts "to depict the multitudinous thoughts and feelings which pass through the mind" of a narrator. It is usually in the form of an interior monologue which is disjointed or has irregular punctuation. While critics have pointed to various literary precursors, it was not until the 20th century that this technique was fully developed by modernist writers such as Marcel Proust, James Joyce, Dorothy Richardson and Virginia Woolf.

Stream of consciousness narratives continue to be used in modern prose and the term has been adopted to describe similar techniques in other art forms such as poetry, songwriting and film.

Alexander Bain used the term in 1855 in the first edition of The Senses and the Intellect, when he wrote, "The concurrence of Sensations in one common stream of consciousness–on the same cerebral highway–enables those of different senses to be associated as readily as the sensations of the same sense". But the term is commonly credited to William James who used it in 1890 in his The Principles of Psychology: "consciousness, then, does not appear to itself as chopped up in bits ... it is nothing joined; it flows. A 'river' or a 'stream' are the metaphors by which it is most naturally described. In talking of it hereafter, let's call it the stream of thought, consciousness, or subjective life".

The term was first applied in a literary context in The Egoist, April 1918, by May Sinclair, in relation to the early volumes of Dorothy Richardson's novel sequence Pilgrimage. Richardson, however, described the term as a "lamentably ill-chosen metaphor".

Stream of consciousness is a literary method of representing the flow of a character's thoughts and sense impressions "usually in an unpunctuated or disjointed form of interior monologue." While many sources use the terms stream of consciousness and interior monologue as synonyms, the Oxford Dictionary of Literary Terms suggests that "they can also be distinguished psychologically and literarily. In a psychological sense, stream of consciousness is the subject matter, while interior monologue is the technique for presenting it". And for literature, "while an interior monologue always presents a character's thoughts 'directly', without the apparent intervention of a summarizing and selecting narrator, it does not necessarily mingle them with impressions and perceptions, nor does it necessarily violate the norms of grammar, or logic – but the stream‐of‐consciousness technique also does one or both of these things."

Similarly, the Encyclopædia Britannica Online, while agreeing that these terms are "often used interchangeably", suggests that, "while an interior monologue may mirror all the half-thoughts, impressions, and associations that impinge upon the character's consciousness, it may also be restricted to an organized presentation of that character's rational thoughts".

In the following example of stream of consciousness from James Joyce's Ulysses, Molly seeks sleep:

a quarter after what an unearthly hour I suppose theyre just getting up in China now combing out their pigtails for the day well soon have the nuns ringing the angelus theyve nobody coming in to spoil their sleep except an odd priest or two for his night office the alarmclock next door at cockshout clattering the brains out of itself let me see if I can doze off 1 2 3 4 5 what kind of flowers are those they invented like the stars the wallpaper in Lombard street was much nicer the apron he gave me was like that something only I only wore it twice better lower this lamp and try again so that I can get up early