Emil Sinclair is a young boy raised in a bourgeois home, amidst what is described as a Scheinwelt, a play on words that means "world of light" as well as "world of illusion". Emil's entire existence can be summarized as a struggle between two worlds: the show world of illusion (related to the Hindu concept of maya) and the real world, the world of spiritual truth. In the course of the novel, accompanied and prompted by his mysterious classmate 'Max Demian', he detaches from and revolts against the superficial ideals of the world of appearances and eventually awakens into a realization of self.
The novel refers to the idea of Gnosticism, particularly the god Abraxas, showing the influence of Carl Jung's psychology. According to Hesse, the novel is a story of Jungian individuation, the process of opening up to one's unconsciousness.
The Gnostic deity Abraxas is used as a symbol throughout the text, idealizing the harmonious union of all that is good and evil in the world. Demian argues that the Christian God is an insufficient god; it rules over all that is wholesome, but there is another half of the world. The symbol of Abraxas appears as a bird breaking free from an egg or a globe.
"The bird struggles out of the egg. The egg is the world. Whoever wants to be born, must destroy a world. The bird flies to God. That God's name is Abraxas."