Traditionally, positive emotions and thoughts, strengths, and the satisfaction of basic psychological needs for belonging, competence, and autonomy have been seen as the cornerstones of psychological health. Without disputing their importance, these foci fail to capture many of the fluctuating, conflicting forces that are readily apparent when people navigate the environment and social world. In this paper, we review literature to offer evidence for the prominence of psychological flexibility in understanding psychological health. Thus far, the importance of psychological flexibility has been obscured by the isolation and disconnection of research conducted on this topic. Psychological flexibility spans a wide range of human abilities to: recognize and adapt to various situational demands; shift mindsets or behavioral repertoires when these strategies compromise personal or social functioning; maintain balance among important life domains; and be aware, open, and committed to behaviors that are congruent with deeply held values. In many forms of psychopathology, these flexibility processes are absent. In hopes of creating a more coherent understanding, we synthesize work in emotion regulation, mindfulness and acceptance, social and personality psychology, and neuropsychology. Basic research findings provide insight into the nature, correlates, and consequences of psychological flexibility and applied research provides details on promising interventions. Throughout, we emphasize dynamic approaches that might capture this fluid construct in the real-world.