Incest
For most people, dreams of incest are profoundly repulsive, but it’s important to remember that dreams almost exclusively speak in symbols—and as a rule, incest should also be viewed symbolically. An example of such interpretation is Julius Caesar's famous dream in which he lay with his mother. Deeply troubled, he consulted his dream interpreters. They explained that the Mother symbolized Rome, which would receive him in its embrace. (See also Sex.)
Siblings
Incest with siblings can mean that the dreamer needs to assimilate unconscious "shadow qualities" represented by the sibling. (It is common to project one's own disliked traits onto siblings.) It may also signify that this assimilation is occurring at the time of the dream. In mythical contexts, sex between siblings can symbolize the union of opposites, the alchemists' coniunctio; though depending on the context, it may carry a negative connotation, which we will return to later.
Parental Complex
Dreams about incest with parents may illustrate that a mother or father complex is obstructing the union of opposites, the goal of individuation. It may signify that the parental complex exerts significant influence over other, more personal complexes. This could involve some form of regressive, unhealthy dynamic that is holding the individual back.
Sacred Motif
Sex between family members is, of course, taboo, but note that it is permissible for gods and superhuman beings. For example, Egyptian royalty were so superior to ordinary people that incest among them was seen as natural. In Greek mythology, incest is also extremely common. The incest motif in myths and archetypal dreams can be a reflection of the hieros gamos (sacred marriage).
Alchemy
At its core, incest itself is not negative in the symbolic language of alchemy (or dreams); it simply expresses the "union of elements of a similar or identical nature" (CW 14, par. 506). However, it often symbolizes dark passions, premature unions, or a preliminary form of the union of opposites. Edinger notes that during the first half of life, the incest symbol betrays the ego’s values, and fear of this can lead to solitary fantasizing and withdrawal into the inner life. Yet, the same symbolic content can become necessary in the second half of life for the solutio of a rigid psychological situation.
In any case, it is dangerous to crawl back to the "mother’s house" (the unconscious), as there’s no guarantee one will emerge again (Edinger 1995, p. 187). A “premature” or unconscious union is always described as destructive, where one element annihilates the other; for example, an “unconscious” union with the mother as an incest symbol signifies the death of the ego.
Jung writes: “Union symbols appear in two phases: first, during the descent into darkness, where the marriage has a sinister quality (incest, murder, death); and then, prior to the ascent, when the union has a more ‘heavenly’ quality” (CW 14, par. 523, footnote). The rich visual material of alchemy contains explicit illustrations of both phases.