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Generally, literature written by Pakistani women writers in English depicts women as victims of patriarchy, social and cultural oppression. Meanwhile, in recent times the short fiction is exploring new paradigms related to the psychological oppression of married women in Pakistan. The following paper selects the short story, ‘The Nightmare’ by Pakistani writer, Rukhsana Ahmad, where a housewife suffers from paranoia because of disconsolate marriage. Therefore, this research aims to study the causes of psychological disorders specifically paranoia among apparently happy housewives. Moreover, the causes and effects of repression and isolation on personality of women would be discussed from the psychoanalytic feminist perspective using the framework of Sigmund Freud (1973- 86) through the character of Fariha. Through the method of character analysis (Dobie, 2011) this paper concludes that the childhood experiences of repression are the reason for victim’s passiveness towards psychological oppression during adult life. This paper would also help in establishing the conclusion that women who suffer abuse in their childhood are more likely to face abuse in their adult lives, which becomes the cause of their psychological instability.