A review of the literature on psychotherapy suggests that improvements in effectiveness, efficiency and accessibility have been hampered by a lack of understanding of how psychotherapy works. Central to gaining such understanding is an accurate description of the change process that occurs when someone solves a psychological problem. We describe the Perceptual Control Theory (PCT) model of human functioning, which can be used to understand the nature of psychological problems and how they are solved. PCT suggests that problems can be broadly grouped into two categories: those that can be solved using existing skills and those that require the generation of new skills. In general, psychological problems belong in the second category. PCT describes a fundamental form of learning in which existing structures and systems are reorganized to create new skills, perspective and insights. Psychotherapy based on PCT is aimed at directing reorganization to the source of the problem.