Speech plays important and complex roles in self-regulation and is experienced in several distinct forms: as a social-discursive mode of communication and direction (social speech), as vocalizations directed to the self rather than to others (private speech), and as the phenomenologically subjective "interior dialogue" through which the personality regulates and directs its own thoughts and actions (inner speech). This paper surveys the levels of discursive interaction that occur during the process of psychotherapy, and makes explicit the assumptions concerning these interactions as they occur in two major language-based approaches to psychotherapy: cognitive therapy and psychoanalysis. The focus of the paper is primarily on Vygotsky's developmental model of inner speech, that is, the progression from social speech, to private speech, and finally, to inner speech--the principle of self-regulatory mechanism of the personality. Verbalization in psychotherapy plays at least two distinct roles. First, verbalization allows a client to externalize her self-regulatory inner speech, making it available for conscious analysis and revision. Second, the speech interactions that occur between therapist and client during psychotherapy become the basis for subsequent revisions of the client's inner dialog. Both directive and non-directive therapeutic styles make extensive use of discursive interaction as the fundamental "medium of exchange" between therapist and client. Vygotsky's developmental model of inner speech effectively illustrates the discursive levels of psychotherapeutic interaction. (LLL)