This dissertation analyzes contemporary American literature, which includes novels, graphic novels, film, and television of the last forty years, to deconstruct the critical relationship between lived space, institutional power, and trauma. It examines literary representations of traumatic moments in recent American history--the attacks on the World Trade Center, Hurricane Katrina, the emergence of the Homeland Security state, and the introduction of the "new metropolis"--to demonstrate that collective trauma at the turn of the century is very much a product of the individual's complex relationship to the state and its institutional auxiliaries. As many philosophers and social critics have argued, institutional forces in contemporary America often deprive individuals of active political engagement through processes of narrative production, and this study discusses how literature both represents and simulates the traumatic consequences of this encounter. Looking to theories on urban, domestic, and textual space, this dissertation explores and problematizes the political and psychological dimensions of space, demonstrating how trauma is enacted through space and how individuals may utilize space and exploit narrative to achieve critical distance from institutional power. Literature as a narrative medium presents vital opportunities both for exposing the machinery of institutional power and for generating positions against the narratives produced by the state.