The present research is concerned to define metonymy and discuss its functions in discourse. The theoretical background to the research is pluralist, including semantic, pragmatic, cognitive and stylistic approaches. Different theories are shown to account for conventional and creative realisations of metonymy in everyday discourse, as well as its functions in literary texts. Metonymy is traditionally described in rhetoric and poetics as a figure of speech but the scope of the term has been extended. It is used to describe a means of structuring narrative discourse (Jakobson 1956), and a generalised cognitive mechanism (Lakoff 1987). Recent claims that metonymy is itself a universally valid explanatory principle, based on the evidence of psycholinguistic experiments (Gibbs 1994), lead to consideration of how metonymy affects semantic and syntactic features of language. The thesis considers typological descriptions and explanations of metonymy in terms of general semantic relationships such as part for whole and cause for effect. Metonymy, traditionally a property of noun phrases, is shown to be present in different word categories and at different levels of discourse. Contiguity, a general principle on which metonymic relationships are based, is revised to include contiguity between physical entities and in their perception and interpretation. Metonymy as a naming and referring mechanism is shown to be a shortening device with cohesive functions, related to ellipsis. Contextualisation is reviewed and theories of domain presented. Referentiality is reconsidered with respect to the effects of metonymy. The thesis investigates whether principled distinctions may be made between metonymy and metaphor, and discusses the functions of metonymy in symbolic language. Arguments for its metafunctions in narrative structure are presented taking into account the presence of metonymy at word, phrase and sentence levels. A new way of analysing narrative through metonymy is proposed, and illustrated from literary works.