In Part 2 of his essay, Freud undertakes a lengthy reading of ETA Hoffmann’s short story “The Sandman,” which he considers an exemplar of uncanny effects. Before he begins his reading, he opens this section of the essay by examining Jentsch’s central example of something uncanny: confusion over “whether a lifeless object might not be in fact animate” (135). For this reason, Jentsch asserts, dolls, automatons, and wax-works often produce uncanny effects in people.

Likewise, insane behavior appears uncanny because of the mechanical processes that lie behind it. Freud takes these examples of uncanniness as a starting point. Jentsch then takes up the theme of Hoffmann’s “The Sandman,” which leaves the reader in doubt he says, as to whether the “figure in the story is a human being or an automaton” (135). Freud’s appraisal of Jentsch’s reading is that his observation is “undoubtedly a correct one” (135). He disagrees with Jentsch though, that Olympia, the lifelike doll, is the locus of the tale’s uncanniness. Instead, Freud claims: “The main theme of the story is […] something which gives its name to the story, and which is always re-introduced at the critical moment: it is the theme of the ‘Sand-Man’ who tears out children’s eyes” (136).