Gabriel García Márquez’s One Hundred Years of Solitude and Salman Rushdie’s Midnight’s Children are hallmarks of the genre of magical realism. A typically problematic genre in terms of classification, this article looks at magical realism from a Freudian perspective, with particular reference to Freud’s notion of The Uncanny. Freud’s notion of uncanniness deals in displacement; it is uncomfortable, haunting and cyclical. The dominant presence of such uncanny effects in magical realist literature, I argue, reveals the haunting presence of colonial trauma within the current postcolonial psyche.