The family and social dynamic surrounding Ofelia could be seen as the catalyst for her phantasies. Carmen does not give Ofelia the full attention of her love as she should as her mother. She is preoccupied and in a distressed and weakened state due to a difficult pregnancy. Because of this, Ofelia shares similarities with the child of Freud’s Family Romances. Ofelia is neglected by her mother, but she still loves her deeply and admires her beauty: “Have you seen my mother? Isn’t She beautiful?” Her unconditional love for her mother is ever-present, although through her mother’s neglect, similarly to the child in Freud’s Family Romances, Ofelia discovers "provocation for beginning to criticize" her mother for "being slighted" and "not receiving the whole" of her love. This is the beginning of Ofelia’s curiosity into alternate views and decisions; because of this, she now has begun to doubt the decisions of her mother and seeks to find different paths and outcomes rather than just the ones her mother sets before her. This “detaching oneself from ones family is a task that faces every young person”.

Ofelia’s father in the movie is an example of Lacan’s imaginary father. The imaginary father is the imago of the father from the child’s imagination. Most often this figure bears little resemblance to the real father as “the death of the father allows the child to idealise him.” So he can be constructed as the ideal father. In Pan’s Labyrinth, Ofelia’s father is portrayed as the ideal father. We never see her father and only hear that he was a tailor and died in the war. But her idealisation of him is projected through her phantasy creatures, such as the faun saying that Ofelia is “daughter of the king” and “your real father had us open portals all over the world to allow your return”. This phantasy clearly shows that the image of her father is as the ideal father, and this is most probably not the case. While her conscious mind rejects Vidal as her surrogate father: “He’s not my father. My father was a tailor. He died in the war. He’s not my father”, her unconscious mind creates phantasies that lead her to idealise her real father and give her hope that he is looking for her in another world as “the absent father is a hole in the Symbolic for the imagination to fill, a space for the exploration of fantasy.” Vidal could never compare to Ofelia’s idealised imaginary father, and neither would any other real man that Carmen may have engaged with.

Due to her world changing completely with the death of her father, a new step-father, a new brother and a new place to live, “she retreats from the complex adult world into fantasy and escapes into the books whose pages morph into illuminated medieval manuscripts, thus bringing to life the imaginative inheritance of the past.” The fantasies, which “aim at the absence of pain and… feelings of pleasure”, not only provide an escape from reality, but they end up impacting on reality. This can be seen when Ofelia places a mandrake root under her mother’s bed as a remedy for her pregnancy pains. Ofelia seems to have unconsciously absorbed the doctor’s advice to take a medicine, as he gives the dosage for his medicine as “just two drops before bed. Two drops only”. Ofelia’s phantasy leads the faun to give Ofelia this mandrake root and to “each morning give it two drops of blood.” The doctor started his treatment just before Ofelia, this treatment helps Carmen to get better and helps Ofelia in believing the mandrake root is the palliative, rather than the doctors medicine. Once the disgusting mandrake root is discovered by Carmen, she exhausts herself in disciplining Ofelia, causing her to become ill again.

Further to impacting on reality, the phantasies of Ofelia allow her, as a child, to become an active member of the adult community as she becomes the main carer and saviour for her newborn brother, as she is freed from parental confinement and able to come into her own being. This