There have been different interpretations of the novella The Turn of the Screw by Henry James dealing with the key question of explaining the apparitions as ghosts or as visual hallucinations. The thesis presents an overview of these interpretations. Instead of interpreting it either as a ghost story or a psychological drama, it is claimed that the mental disorder of the main character is interrelated with her emotional states and ghost apparitions. Moreover, relevance of the novella’s circular structure is examined and compared to the circularity and complexity of its story.