The Natyashastra, a foundational treatise on the performing arts originating from ancient India dating back to the period between 200 BCE and 200 CE. It is a leading text within the Indian epistemological framework authored by Bharata Muni, which provides a comprehensive examination of the theoretical underpinnings of dramatics and aesthetics. The rasa theory, which is central to the Natyashastra, classifies nine distinct emotional states or sentiments that emerge from the interplay of various affective stimuli. Natyashastra has had a profound impact on the tradition of Indian performing arts and has permeated contemporary discussions in the fields of aesthetics, philosophy, neuroscience, and performance studies. Its psychological foundations are intricately woven into the Indian knowledge system, reflecting a deep understanding of stage performance and human emotion. This review paper focuses on the intersection between Bharatamuni's Natyashastra and modern psychology, highlighting its relevance to contemporary psychological principles within the framework of the Indian knowledge system. By examining its key elements, such as the Rasa theory, the concept of Bhava, and the psychophysical techniques prescribed for performers, this paper reveals their alignment with modern psychological constructs. The review posits that Bharata Muni's insights into human emotions, behavioral expressions, and cognitive processes within the Natyashastra foreshadow numerous contemporary psychological theories and are deeply embedded within the Indian epistemological framework. By drawing parallels between the theoretical constructs of the Natyashastra and modern concepts such as emotion regulation, empathy, and cognition, the review underscores the enduring wisdom contained in this ancient text. It further discusses the implications of integrating the principles elucidated in the Natyashastra into contemporary therapeutic practice and educational methodologies, thereby underscoring the ongoing relevance and applicability of the Indian knowledge system. The review aims to bridge the deep insights within the Natyashastra with modern scientific inquiry, thereby enhancing the understanding of the human psyche and cultural expressions. Through a synthesis of historical and contemporary perspectives, this review contributes to a holistic appreciation of the Natyashastra as a vital element of the Indian epistemological framework and a valuable resource for advancing psychological well-being and human potential. In doing so, the review highlights the enduring significance of the Natyashastra within the broader discourse on Indian knowledge and the social sciences.