Postmodernism in literary theory challenges traditional notions of reality, truth, and meaning. It emphasizes the role of language and power in shaping our understanding of the world, rejecting grand narratives and embracing fragmentation, irony, and multiple perspectives. Key thinkers like Lyotard, Derrida, and Foucault have shaped postmodern thought. In literature, postmodernism blurs boundaries between fiction and reality, subverts narrative conventions, and explores themes of identity, simulacra, and hyperreality through techniques like metafiction, pastiche, and intertextuality.