Subjective idealism is a fusion of phenomenalism or empiricism, which confers special status upon the immediately perceived, with idealism, which confers special status upon the mental. Idealism denies the knowability or existence of the non-mental, while phenomenalism serves to restrict the mental to the empirical. Subjective idealism thus identifies its mental reality with the world of ordinary experience, and does not comment on whether this reality is "divine" in some way as pantheism does, nor comment on whether this reality is a fundamentally unified whole as does absolute idealism. This form of idealism is "subjective" not because it denies that there is an objective reality, but because it asserts that this reality is completely dependent upon the minds of the subjects that perceive it.

The earliest thinkers identifiable as subjective idealists were certain members of the Yogācāra school of Indian Buddhism, who reduced the world of experience to a stream of subjective perceptions. Subjective idealism made its mark in Europe in the 18th-century writings of George Berkeley, who argued that the idea of mind-independent reality is incoherent, concluding that the world consists of the minds of humans and of God. Subsequent writers have continuously grappled with Berkeley's sceptical arguments. Immanuel Kant responded by rejecting Berkeley's immaterialism and replacing it with transcendental idealism, which views the mind-independent world as existent but incognizable in itself. Since Kant, true immaterialism has remained a rarity, but is survived by partly overlapping movements such as phenomenalism, subjectivism, and perspectivism.