This therapy proposes that there are three ego states, the Parent, the Adult, and the Child, in which individuals operate, and early life experiences shape the life scripts that one plays. Analysis of how the individual moves in and out of these states in various contexts and relationships is indicative of his/or her actions and interactions, which are also referred to as "transactions" and "strokes". The T.A. therapist assists individuals in understanding decisions made at an early age (i.e. "I must be perfect", "Don't make mistakes", or "I have to please others to be accepted"). Based on that insight, clients are assisted in making a new decision, as well as engaged in communication and relationship without games.

Some of the techniques used in transactional analysis are:

1. Contract: this is an essential element with all clients, individual and group, establishing the structure of the relationship, from the Child Ego state perspective of how the client will be different as a result of work done. The contract is concrete, specific, and measurable.

2. Script analysis: this is a checklist designed to explore early injunctions, decisions, games, and life positions. Script analysis is the process of uncovering the unconscious early decisions about how life shall be lived.

3. Role-playing: in transactional analysis, this technique is viewed as a "time out" from reality in which the client draws closer to the self, engaging in an intimacy and spontaneity of the "here-and-now" vs. the intellect of discussing what has occurred or consideration of what may happen. The focus is to engage the intellectual, physical, spiritual, and emotional self in an active way in session using psychodrama, allowing the individual to learn from the moment.

4. Structural analysis: this involves conducting first and second order analysis on the ego states expressed by the client (Parent, Adult, and Child), as well as the transactions between them as they act and interact with others in the client's life.

5. Empty chair: this is used to represent the various ego states, with the client playing out the various states (Parent, Adult, and Child).