Following a critical review of the nature of explanation, it is argued that explanations, whether of singular events or empirical regularities, are fundamentally theoretical in nature. Theoretical explanations invoke hypothetical structures which are neither deductively related to empirical regularities, or nomothetic laws, nor simply predictive of singular events. The value-ladeness of our theoretical explanations in psychology and, hence, our rationality, is only bounded by the historical, social-cultural, life forms which characterize our linguistic and communal practices. It is concluded that psychology, in its search for theoretical explanations, is inescapably a hermeneutic endeavor.