The paper analyzes Ivo Andrić’s novel The Damned Yard, a work that has received continuous critical attention since its publication. Its interpretation presents a challenge even to the latest schools of literary theory. With a focus on the poetics of space, the argument applies Michel Foucault’s theory and discusses the roles heterotopias play in structuring the narrative. Heterotopias reveal the attributes of real and metaphoric spaces, while the dynamics of space influence the movements of narration in the novel. Reproducing diverse forms of deviance, heterotopia delineates the frame of the individual’s identity. The conclusion suggests that the text’s complex metaphysical web of meanings is produced by the deranged identity appearing in a closed space, and the correspondingly deranged narration.