Power is an inescapable feature of human social life and structure. This paper addresses the nature of power. The standard theory is that power is the capacity for influence and that influence is based on the control of resources valued or desired by others. However, there have always been problems with this theory and new ones have appeared. The paper summarizes the standard theory and its problems, outlines the different meanings of power and presents a new theory emphasizing group identity, social organization and ideology rather than dependence as the basis of power. It proposes that power is based on persuasion, authority and coercion. A key point is that the theory changes the way these processes have been understood by reversing the causal sequence of the standard theory. The latter argues that control of resources produces power, power is the basis of influence and that mutual influence leads to the formation of a psychological group. The three-process theory argues that psychological group formation produces influence, that influence is the basis of power and that power leads to the control of resources. Implications of the theory for social change, coercion, prejudice and the extent to which power is a social evil are briefly noted. The challenge is to study how power emerges from and functions within social relationships with a definite social, ideological and historical content rather than reifying it as an abstract external force producing generic psychological effects. Copyright © 2005 John Wiley & Sons, Ltd.