Civilization and its Discontents spells out Sigmund Freud's somewhat astonishing theory that civilization itself is the main source of unhappiness among civilized people. By inhibiting their natural instincts, civilization drives people into a perpetual state of guilt, causing this unhappiness. Using themes from his earlier work in psychoanalysis, Freud examines the source of this guilt and the mechanism by which it controls human instinct. Freud concludes his book with a suggestion that civilizations and individuals develop in parallel ways, and that just as it is possible for individuals to become neurotic, it may be possible that civilizations can be disturbed in a similar way.

Freud begins by referring to an earlier work on the topic of religion and its origin in human civilization. He addresses a remark made to him by a friend that there is a desire among individuals to feel they belong to a kind of eternal continuum. Freud refers to this as an "oceanic" feeling and approaches it from a psychoanalytic viewpoint. He concludes that infant children at first do not distinguish between themselves and the external world. Once they do, their ego arises, setting them on the path of development. This initial feeling, however, may be the source of this "oceanic" impulse toward religion, he concludes. Freud uses this as a departure point to establish the fact that instincts that were present in primal man remain within every individual, even though they have been incorporated, transferred or possibly covered over. He thus lays the groundwork to discuss civilization in terms of natural instincts and makes the suggestion that the two are linked somehow.

Relying on his earlier work in psychoanalysis, Freud enters a discussion of the definition of civilization and what features it has. He then moves to the psychology of the individual members of a civilization, examining their instincts and motives in forming a civilization, as well as the instincts that would seem to harm the survival of civilization.

Freud concludes that in order to join into a civilization, humans are required to suppress many of their natural instincts. This makes them essentially unhappy. They are made to suppress these instincts through guilt, which arises first in the individual as a form of fear of punishment from an external authority, and later is taken up by the individual himself, who creates a conscience that seeks to punish the individual (self) for its bad thoughts.

The source of this guilt, Freud concludes in the latter part of the book, is an eternal struggle within each individual between an instinct for love and an instinct toward death and destruction. This struggle is inevitable, Freud suggests. By analogy, Freud extends these conflicting instincts to the development of civilization, drawing a parallel with human development. He does not attempt to judge the value of civilization but ends the book with the hopeful suggestion that civilization may eventually develop past this ultimately destructive stage.