In this paper we discuss the semiotic functions of the psychological borders that structure the flow of narrative processes. Each narration is always a contextual, situated and contingent process of sensemaking, made possible by the creation of borders, such as dynamic semiotic devices that are capable of connecting the past and the future, the inside and the outside, and the me with the non-me. Borders enable us to narratively construct one’s own experiences using three inherent processes: contextualization, intersubjective positioning and setting of pertinence. The narrative process – as a subjective articulation of signs in a contingent social context – involves several functions of semiotic borders: separation, differentiation, distinction-making, connection, articulation and relation-enabling. The relevant psychological aspect highlighted here is that a border is a semiotic device which is required for both maintaining stability and inducing transformation at the same time. The peculiar dynamics and the semiotic structure of borders generate a liminal space, which is characterized by instability, by a blurred space-time distinction and by ambiguities in the semantic and syntactic processes of sensemaking. The psychological processes that occur in liminal space are strongly affectively loaded, yet it is exactly the setting and activation of liminality processes that lead to novelty and creativity and enable the creation of new narrative forms.