Of vital importance to Sinclair's character arc is his childhood understanding of the existence of two worlds—one light and one dark. He perceives the light world of order and goodness as the safe world of his parents and family. The dark world, disorderly and violent, exists mostly outside of his home and family. However, even as a child, Sinclair sees the dark world overlapping with the bright world in some ways. Sometimes he feels drawn to the fascination of the dark world. That he will pass through it on his life's journey seems inevitable. He first encounters the dark world in Frank Kromer. The result of the encounter causes Sinclair to feel guilt and remorse, separating him from the light world of his family. Although Sinclair doesn't stay in the dark world, he moves in and out of situations that spark similar negative feelings and challenge his sense of self and his concept of the world. Sinclair does not embark on his journey alone. Mentors and guides assist him at different points, and Sinclair has assistance from within. Through dreams and intuition, through imagination and painting, Sinclair accesses his inner self and comes closer to his goal. Finally able to rely on himself, he no longer needs a mentor or guide.
Max Demian first enters the novel when he and his mother move to Emil Sinclair's hometown and he attends Sinclair's school. Only a little older than Sinclair, Demian seems far beyond his years in knowledge and maturity. He is a social outsider from the beginning. Rumors circulate that he and his mother are not Christian and don't attend church. Other rumors hint that he and his mother have an unconventional relationship. He is known to be intelligent, gaining the respect of teachers and other students, though they never welcome him warmly. Demian soon identifies Sinclair as different from the others, and the two strike up the beginnings of a friendship. Demian helps Sinclair break free of Frank Kromer's blackmail, the first illustration of the power of his will. Indeed, he seems able to will others' actions, anticipate their responses, and sense future events through intuition, visions, and dreams. Demian's character takes on additional layers of meaning as the primary guide on Sinclair's journey. Demian is in some ways an external character and in some ways a manifestation of Sinclair's inner self. When Sinclair achieves a certain measure of self-realization, he finds that Demian advises Sinclair to look inside himself for guidance.
An older neighborhood child, Frank Kromer enjoys making the younger children do tasks for him. He is dominant and enjoys his sense of power over those weaker than he is. One way he exerts his power is to have other children find objects of value among the trash and bring these to him. Another is by bullying. He threatens to reveal Emil Sinclair's theft—which did not actually happen—and uses Sinclair's shame and fear to extort money and favors. He manages to make it so that the debt is never quite paid, and it is likely this situation would have continued indefinitely had Max Demian not intervened. Kromer's influence brings out Sinclair's impulse to lie—elaborately. He does not force Sinclair to transgress, and he is unaware of Sinclair's true transgression of telling a falsehood and swearing it is true. He is important because he is part of the dark world and part of Sinclair's first foray into it. Kromer represents everything Sinclair dislikes in himself and what he must learn to face and accept as he journeys toward self-realization.
Sinclair first encounters Pistorius through his music, which Sinclair considers "absolute music, where one feels that someone is trying to fathom heaven and hell" (Chapter 5). When it turns out Pistorius is a follower of the god Abraxas, who is both divine and devilish, Sinclair knows he has something to learn from him. Pistorius teaches Sinclair that staring at the irregular shapes of nature can provide a feeling of harmony with nature, insight into the self, and a sense of being part of the divine, continual creation of the world. However, Pistorius's views and expectations do not always match Sinclair's. Pistorius wants to make the worship of Abraxas a legitimate religion. He believes that if enough followers of Abraxas got together, they would form a sort of church. He tells Sinclair he was drawn to ministry in the church, and though he has left the traditional church behind he still feels called to a ministerial role. He is more scholarly than Sinclair—looking to old texts and traditions rather than dreams and art for his inspiration. Ultimately, Sinclair finds Pistorius's way of looking at the world too limiting and leaves him behind.
Mother Eve is knowing and motherly, as well as sensual. Although Emil Sinclair does not meet her in person until late in the novel, he has dreamed of her many times and seen her in a photo. In the dream, she is both motherly and sexual, sparking in him feelings of both love and revulsion. Mother Eve has the same extraordinary intuition and insight into other people as does her son. She seems to know things will happen before they actually do and often tells Sinclair things about himself he does not yet know. Although she does not satisfy Sinclair's sexual longing for her, she acknowledges it and does not shame him for it. Mother Eve is a manifestation of the Swiss psychologist Carl Jung's mother archetype, or what sometimes is called the "great mother." As an archetype, an unconscious model of a type of person, she is first available to Sinclair in his dreams and imagination, expressed through painting. When she appears in his painting and in his dreams, she becomes the face of his anima, or inner feminine part of the self.
At boarding school, Emil Sinclair becomes involved in a social life that involves more drinking than studying. Consequently, his grades, health, and demeanor fall rapidly downhill. He meets a girl and, without knowing her personally, makes her his "Beatrice." This name is not her true name, which Sinclair never reveals. Rather, it is the name of Italian poet Dante Alighieri's (1265–1321) unrequited love from his Divine Comedy. In Dante's medieval epic poem, Beatrice is a blessed lady, now in heaven, who helps him traverse hell and safely reach heaven. In Demian Sinclair's "Beatrice" performs a similar function. Under her influence, Sinclair curbs his drinking and begins to improve his grades at school. His teachers stop threatening him with expulsion, and his father stops pestering him to clean up his act. One day he decides to paint her portrait—a portrait that, later, he sees bears some likeness to Max Demian and some likeness to himself. The likenesses show Beatrice as a manifestation of a feminine part of his self—what Carl Jung calls the anima. As Sinclair continues painting and dreaming, Beatrice transforms into a more nearly completed picture of his anima, Mother Eve.