The term neurosis was coined by the Scottish doctor, William Cullen in 1769 to refer to “disorders of sense and motion” caused by a “general affection of the nervous system.” The term (also psychoneurosis or neurotic disorder) in modern psychology refers to any mental disorder that, although may cause distress, does not interfere with rational thought or the persons' ability to function. This is in contrast to psychosis which refers to more severe disorders.

The word derives from two Greek words: neuron (nerve) and osis (diseased or abnormal condition).

A neurosis, in psychoanalytic theory, is an ineffectual coping strategy that Sigmund Freud suggested was caused by emotions from past experience overwhelming or interfering with present experience. For example, someone attacked by a dog as a toddler may have a phobia or overwhelming fear of dogs. However, he recognized that some phobias are symbolic and express a repressed fear.

In Carl Jung's theory of analytical psychology a neurosis results from the conflict of two psychic contents, one of which must be unconscious.

There are many different specific forms of neuroses: pyromania, obsessive-compulsive disorder, anxiety neurosis, hysteria (in which anxiety may be discharged through a physical symptom), and an endless variety of phobias.

Everyone has some neurotic symptoms, often manifested in ego defense mechanisms that help them deal with their anxiety. Defense mechanisms that result in difficulties in living are termed neuroses and are treated by psychoanalysis, psychotherapy/counselling, or other psychiatric techniques.

Despite its long history, the term 'neurosis" is no longer in common use. Current classification systems have abandoned the category of neurosis; the DSM-IV has eliminated the category altogether. Disorders formerly termed as neuroses are now described under the headings of anxiety and depressive disorders.

The usage of the term neurosis remains controversial, and it has been argued that a more appropriate term is needed to replace it.