Literary theory in a strict sense is the systematic study of the nature of literature and of the methods for analyzing literature. However, literary scholarship since the 19th century often includes—in addition to, or even instead of literary theory in the strict sense—considerations of intellectual history, moral philosophy, social prophecy, and other interdisciplinary themes. In the humanities, the latter style of scholarship is often called simply "theory." As a consequence, the word "theory" has become an umbrella term for a variety of scholarly approaches to reading texts.

Most of these approaches are informed by various strands of Continental philosophy. One of the fundamental questions of literary theory is "what is literature?", though many contemporary theorists and literary scholars believe either that "literature" cannot be defined or that it can refer to any use of language. Specific theories are distinguished not only by their methods and conclusions, but even by how they define a "text." For some scholars of literature, "texts" comprises little more than "books belonging to the Western literary canon." But the principles and methods of literary theory have been applied to non-fiction, popular fiction, film, historical documents, law, advertising, etc., in the related field of cultural studies.

In fact, some scholars within cultural studies treat cultural events, like fashion or football riots, as "texts" to be interpreted. By this measure, literary theory can be thought of as the general theory of interpretation. Since theorists of literature often draw on a very heterogeneous tradition of Continental philosophy and the philosophy of language, any classification of their approaches is only an approximation.

There are many "schools" or types of literary theory, which take different approaches to understanding texts. Most theorists, even among those listed below, combine methods from more than one of these approaches (for instance, the deconstructive approach of Paul de Man drew on a long tradition of close reading pioneered by the New Critics, and de Man was trained in the European hermeneutic tradition).

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