Madness has long been a popular theme for literature, featuring as a trope of horror, mystery, tragedy and comedy genres in varying degrees of amplitude. The topic has provided a significant access point for analysing historical, socio-political and cultural issues as it addresses controversial themes of alienation and criminality as well as philosophical theories of perception and consciousness. As a result, studies on the representation of madness in literature have been dominated by historical approaches that focus directly on social, political, philosophical and psychoanalytical interpretive models. Comparatively little has been done to analyse madness in literature from a narratological perspective. It is for this reason that I will conduct a narratological study on the impact of madness on narrative and fictional world structures. I am specifically interested in the way in which madness can be embedded across multiple levels of the narrative and the effect that this has on readers’ imaginative and interpretive processes. Close readings of Chuck Palahniuk’s Fight Club (1996) Bret Easton-Ellis’ American Psycho (1991) and John Banville’s The Book of Evidence (1989) will uncover some of the techniques that are used to embed madness into the textual and imaginative structures of a narrative, and will demonstrate how this works to deceive and challenge the reader. I will demonstrate the need for an expansion of terms within the narratological model that can cope specifically with the theme of madness.