James's The Turn of the Screw is considered one of literature's greatest ghost stories. Since its publication in 1898, it has been popular with both critics and the public. For the critics, the debate has always been sharply divided. When it was first published, the issue was whether the tale was artistically sound or a morally objectionable story. Many critics, like an Outlook reviewer, note both: "it is on a higher plane both of conception and art. The story itself is distinctly repulsive." Likewise, a Bookman reviewer notes: "We have never read a more sickening, a more gratuitously melancholy tale. It has all Mr. James's cleverness, even his grace." And a review in the Independent says that, "while it exhibits Mr. James's genius in a powerful light," the book "affects the reader with a disgust that is not to be expressed."

Those who found negative things to say about the book were often commenting on the subject matter, the damnation of children, which was a taboo and relatively unexplored theme at the time. A reviewer for the Independent expresses this feeling best, noting that Miles and Flora are "at the toddling period of life, when they are but helpless babes," and that through their participation in reading the story, readers assist "in an outrage upon the holiest and sweetest fountain of human innocence" and help to corrupt "the pure and trusting nature of children." Some early reviewers did purely enjoy the tale as a good ghost story, and recognized James's efforts to improve his medium. A reviewer for the Critic states that the story is "an imaginative masterpiece," and William Lyon Phelps, the stenographer to whom James dictated the story, calls it "the most powerful, the most nerve-shattering ghost story I have ever read," providing for "all those who are interested in the moral welfare of boys and girls an appeal simply terrific in its intensity."

For the next few decades, most critics continued to view the story as a ghost story, whether or not they agreed with the moral quality of the tale. However, in 1934, with the publication of Edmund Wilson's "The Ambiguity of Henry James," the debate was sharply divided again, this time into those who read the tale as the frantic ravings of a repressed woman and those who still believed it to be a ghost story. Wilson's assertion that "the young governess who tells the story is a neurotic case of sex repression, and the ghosts are not real ghosts at all but merely the governess's hallucinations," provided the fuel for the former viewpoint. Since then, the critical debate has been almost comical, as various people have come along and stated, with absolute certainty, that one viewpoint was true and the other was false. In 1948, Robert Heilman says, "It is probably safe to say that the Freudian interpretation of the story ... no longer enjoys wide critical acceptance."

In 1957, Charles G. Hoffman notes that "the Freudian interpretation of The Turn of the Screw can never be denied since ... the governess is psychopathic." In the same decade, Leon Edel shifted the focus somewhat, saying that the novel "has become the subject of a long and rather tiresome controversy arising from a discussion of circumstantial evidence in the narrative." Edel further notes that most critics fail "to examine the technique of the storytelling, which would have made much of the dispute unnecessary." Edel focused on the method of narration to illustrate that the governess is an unreliable narrator and concluded that it is the governess "who subjects the children to a psychological harassment that...