Happiness is understood from different perspectives including environmental, sociological, economical, political and psychological processes. In this paper an attempt is made to interpret the nature and dynamics of happiness from a psychological perspective. In the bottom-up approach to happiness, the general environmental factors like family, marriage, education and income that contribute to happiness are studied whereas in the top-down approach the intraindividual processes that determine happiness are emphasized. It has been found that the major sources of variance of happiness rest with the intraindividual processes. A model of happiness that underlines the importance of cognitive processes, personality processes, motivation and emotional processes are suggested. Distinctive cognitions, specific personality traits, distinctive motivational processes and emotional paths make the individual happy. Finally the importance of situations is examined. The fundamental striving of human beings appears to be one of seeking happiness in life regardless of his race, religion, language or nationality. Individuals everywhere and every time are moved by this zest for happiness. A person who enjoys full happiness can truly say that he has found meaning in life and that his life is at a pinnacle of achievement, a state of self �transcendence. However happiness as a psychological process is not well studied. In the recent years there have been many attempts to study the nature and dynamics of happiness from different perspectives. It is also a matter of happiness that many numbers of researches are being done now in the area of happiness. Is happiness a matter? Even though happiness can be objectified, first and foremost happiness is a subjective experience that originates in the psyche of the individual. In this paper an attempt is made to understand the nature and dynamics of happiness from a purely psychological perspective.