In this article I explore the controversial issue of the origin of free indirect style. While its most rigorous analyst, Banfield (1982), claims that the style is purely literary and cannot be found in ordinary spoken discourse, Adamson (1994) has located its origin in everyday linguistic practices, such as empathetic deixis and quotative modality. I add a new dimension to the study of these issues by moving beyond the level of individual sentences. In particular, I focus on referential choices for the designation of characters. My case-study is Joyce's Ulysses, a novel which Leavis (1948) once characterized with trademark polemic as a 'dead end'. By way of contrast, Wales's study of its language claims for it the highest praise by dint of the text's exemplary Bakhtinian polyphony. I complicate the Bakhtinian reading of Joyce by not taking dialogicity to mean simply a co-existence of different discourse varieties, but by trying to find parallels between the presentation of character consciousness and spoken interaction. My examples of Joyce's use of pronouns to refer to characters in free indirect style seem to create discourse inconsistencies (often interpreted with regard to the disintegration of the Modernist self), rather than allow readers to interpret pronominal references automatically. I argue that the best way to account for this bizarre strategy is by aligning it to spoken discourse where vague pronominal references, in the form of personal and demonstrative pronouns, are commonly found. The argument advanced by spoken discourse analysts, that the construction and understanding of reference is a joint endeavour of speaker and addressee, allows me to construct Joyce's text as dialogical in Bakhtinian terms and thus locate once again the origin of free indirect style in everyday discourse.