The impact of traumatic experiences on cognitive processes, especially memory, is reviewed. The major psychological sequelae of trauma (reexperiencing, avoidance, hypervigilance) and posttraumatic stress disorder (PTSD) are noted and related to traditional views of fear conditioning. Evidence indicating enhanced memory for the gist of emotional events is reviewed as are psychological and neurophysiological mechanisms underlying this enhancement. This view is updated by introducing the distinction between explicit and implicit memory and its relevance to traumatic memory and PTSD. The central role of “the experiencing ego” in the storage and retrieval of episodic memories is postulated. This leads into discussion of dissociative experiences during traumas and the occasional amnesia for voluntary recall of the trauma accompanied by involuntary, uncontrollable flashbacks of it. The relationship of dissociative experiences to hypnotizability and to pathological reactions to traumas is discussed, although the interpretation of those correlations is questioned. The article concludes by noting that beyond conditioning of fear, traumas often violate and shake the victims' basic assumptions about the benevolence, justice, and meaningfulness of their physical and social worlds. Psychotherapy with trauma victims then needs to attend not only to extinguishing the victims' fear and feelings of extreme vulnerability, but also to rebuilding their basic beliefs about the relative benevolence of the world.