This paper examines Egypt’s ‘Abbasiya and Khanka state mental asylums in British occupied Egypt. It focuses on the years 1882 until 1935, the year that Egyptian psychiatrists took control of their own asylums. Using the state mental asylums as a case-study, I look at moments that display the colonial state’s fractured nature, its failures, and its lack of coherence. It is straight-forward enough to point out that Egypt’s state asylums did not achieve their purported intent. But rather than seeing these moments as devoid of meaning, I ask what they reveal about the reality of occupied Egypt and also what real effects they produced. This perspective borrows from Freud’s understanding of parapraxis, on which Lacan elaborates. Mistakes, or slips, are moments when what Lacan calls the real—a point where the symbolic order of culture, ideology, and the imagined order of identity break down—emerges in discourse. The systemic failures of Egypt’s asylums, along with the discursive slips of colonial psychiatrists, were moments when the repressed truth of Egypt’s occupation was articulated. The annual “Lunacy Division” reports, along with the memoirs of colonial psychiatrists, contain a number of the repressed truths that rested on the surface of colonial discourse. These truths can also be found in the actions and words of the Egyptian patients, families, doctors, and nurses that the reports describe. In most of these cases, it was Egyptian actions and words that generated moments of British parapraxes. I argue that these unintentional slips and mistakes unmasked the reality that the general environment of colonial Egypt was quite simply one of madness and absurdity. Part of this madness was a demand to work, conform to discipline, and be a contributing member of the “modernized” Egypt rather than to escape to spaces and temporalities of pleasure. Ultimately, the British were not in Egypt to treat the Egyptians or to even provide adequate accommodation, nor did they have the capacity to do so. Hundreds of Egyptians entered the ‘Abbasiya and Khanka asylums only to be discharged well before displaying any signs of recovery. The failure of Egypt’s asylums to achieve their own purported aim—to treat the mentally afflicted—led to the growth of state apparatus through cataloguing those who passed through asylum, and provided additional reasons to increase police presence on the streets. But even more ironic, the failures of colonial psychiatry helped justify a continued occupation of Egypt.