This paper gives an analysis of the Balkan discourse in 20th century from colonial and postcolonial point of view. In the first part the West European geopolitical and metaphorical approach is considered. It is focused not only on the geographical name of Balkan Peninsula but first of all on the figurative and metaphorical language introducing and forming different stereotypes and images of Balkan representations as for example a 'powder keg', an area of 'ancient hatreds', 'the clash of civilizations', 'the fracture zone', European 'heart of darkness', 'wilde Europe', 'not-yet'/'never quite' Europe an so on. Those images are based on WE nad THEY opposition from the Western colonial point of view. The second part of the paper analyzes three prose works by eminent writers from the Balkans - Croatian literary discourse is presented in Miroslav Krleza's short story'In Dresden. Mister Wu San Pey is interested in Serbo-Croatian problem' (1924), Serbian one is represented by Ivo Andric's short story 'A Letter from 1920' (1946) whereas Bosnian - by Nenad Velickovic's epistolary novel 'Sahib. Impressions from depression' (2001). It discovers that Balkan writers in different crucial historical periods used the figure of 'the Stranger'/'The Other' to underline more vividly their own identity problems. So for them the juxtaposition of 'the own kind' (We) and 'the stranger' (They) is basic to demonstrate a very complicated of European (colonial) and Balkan (colonized) relationship and mutual perception. The last part gives the analysis of a new postcolonial approach to the Balkan discourse initiated in Western universities by the eminent scholars of Balkan origin who published their books in English. In this part Maria Todorova's study 'Imagining the Balkans' (1997), Vesna Bjelogrlic-Goldsworthy's monography 'Inventing Ruritania: The Imperializm of the Imagination' (1998) and Bozidar Jezernik's anthropological book 'Wild Europe. The Balkans in the Gaze of Western Travellers' (2004) are presented as an example of a corrective counterpoint to currently circulating representations of the Balkans.