Rank's development of will psychology led him to a philosophy of the psychological, outlined in Truth and Reality. Here he explores the psychological determinants of the relationship of inner world to outer reality.

Anticipating one of the central findings of post-Freudian psychiatry, he argues that "truth" is irrelevant to the work of therapy. He contrasts the negative externalization of will, which leads to denial and guilt, with the creative power of will, tracing this conflict in both the individual and the history of human society.