Sigmund Freud first identified the psychological process of transference and projection and brought it into what is now modern day psychotherapy. He noticed that people had strong feelings and fantasies about him that had no basis in reality. Transference has become a more modern concept since Freud. In fact, transference is actually something that happens in life - and not just in psychotherapy.
What is Transference? During transference, people turn into a "biological time machine". A nerve is struck when someone says or does something that reminds you of your past. This creates an "emotional time warp" that transfers your emotional past and your psychological needs into the present. In less poetic terms, a transference reaction means that you are reacting to someone in terms of what you need to see, you are afraid of or what you see when you know very little about the person. This all happens unconsciously.
What Is Projection? Some therapists refer to transference as a "projection." In this case you are projecting your own feelings, emotions or motivations into another person without realizing your reaction is really more about you than it is about the other person.
Although projection is a common process in human beings it is a “blind-spot” to ourselves. We have a tendency to see in others what we don’t wish to see in ourselves. According to Sigmund Freud, projection is a psychological defence mechanism whereby one "projects" one's own undesirable thoughts, motivations, desires, and feelings onto someone else. 'Emotions or excitations which the ego tries to ward off are "spit out" and then felt as being outside the ego...perceived in another person's.
In Inhibitions, Symptoms, and Anxiety, Freud (1926) listed ten manners by which the ego defends itself against dangerous thoughts: regression, reaction-formation, isolation, undoing, repression, introjection or identification, projection, turning