The psychosocial hypothesis builds on the finding that most ufo reports have mundane explanations like celestial objects, airplane lights, balloons, and a host of other misperceived things seen in the sky which suggests the presence of an unusual emotional climate which distorts perceptions and the perceived significance and anomalousness of merely terrestrial stimuli. In the more exotic situation where people claim direct contact with extraterrestrials, the need for a psychosocial approach seems obligated by the presence of at least 70 claims of people meeting Venusians and at least 50 claims of meeting Martians; both worlds now known to be uninhabitable and devoid of any advanced civilization. Hoaxing seems to explain some of these contactees claims, but visionary dreams, hallucinations, and other mental processes are clearly implicated in such myth-based material. By generalization, the other material suggesting the presence of extraterrestrial entities from elsewhere is hypothesized to be explainable by similar means. The observed presence of surreal dream-like activity and imagery or themes based in the cultural environment and historically understood sources reinforces the proposition that the extraterrestrial hypothesis is unnecessary and, by Occam's razor, probably incorrect.