4 – 6 year of age, prevailing erogenous zone – genitals. Libidinal satisfaction can be experienced in infantile masturbation. Children are interested in genitals of their and opposite gender, demonstrate them to each other, experiencing voyeuristic and exhibitionistic satisfaction. Comparison of his/her genitals with genitals of the parents is important for the development of sexual identity. Central event – development of Oedipal complex, beginning of triadic relationships - desire to own the parent of the opposite sex and to eliminate the parent of the same sex who is seen as a rival. Castration anxiety – fear of punishment for such desires. Emergence of Super-ego – by obeying to the rules set by parents, child transforms them into personal norms of behavior and moral judgment. Improvement of Ego functions, use of mature psychological defenses. Repression – total oblivion of Oedipal desires. Identification with a parent of the same sex recognizing his/her superiority. Final development of all functional structures of psyche (id, ego, super-ego) and their inter-relational matrix