The unprecedented opportunities for production and collaborative working supported by Web 2.0 technology offer immense potential for active knowledge creation. Research to date has mostly explored the demographic factors that influence production but we argue here that a more detailed understanding of the psychological determinants of online content creation is required if the potential of Web 2.0 is to be maximised. This paper outlines a psychologically driven discussion of the similarities and differences between online and offline contexts and factors that influence online content creation and identity. It demonstrates why a nuanced understanding of the factors that determine not only who produces online content, but what, how and why it is produced is essential to fully appreciate the complexity of the relationship between production and identity. We discuss how situational aspects of the online context and dispositional characteristics of users interact to determine production behaviour and highlight the importance of curation as a key skill for effective content creation and identity management. A number of challenges concerning the lack of co-presence, immediacy and durability and the importance of considering the intended audience and individual differences in practices and preferences concerning privacy are identified and we demonstrate how consideration of the psychological factors that influence online content production and identity creation can inform policy and practice concerning digital inclusion and web safety.