Psychological realism is a narrative technique that aims to describe and divulge the inner conflictual self of a character. It also seeks to underscore the hidden reasons spurring the actions of a character. Fiction creates reality through imagination; paradoxically a ‘fabricated’ story can reveal basic existential truths about humans. In this paper, first, elaborating the concept of fictional reality and psychological realism, an exhaustive analysis of Ikram Ullah’s novel Gurg-i Shab has been done. Published in General Zia’s era, this novel was banned, most probably for its psychological realist technique that aimed to raise some thorny questions about incest and its unwieldy effects on the psyche of Zafar/Shafi, the protagonist of the novel.