A theory of the origins and mechanisms of denial, which is frequently characteristic of alcoholics, is proposed on the basis of a biopsychological rather than a psychodynamic model of emotion. The biopsychological approach views denial as a consequence of a developmental defect in the apperception of interoceptive stimuli and in the appraisal of the significance of environmental events. Three hypotheses must be substantiated in order to support this theory: (1) alcoholics were physiologically unstable in arousal regulation; (2) alcoholics cannot cognitively discriminate interoceptive cues and physiological states; and (3) alcoholics cognitively underestimate emotion-laden events in their lives. Research which demonstrates the validity of these hypotheses is reviewed and implications for future research and treatment strategies are discussed.