When we talk about someone who is in denial we believe what we are discussing is a psychological defense mechanism. To believe that a narcissist is using denial as a defense mechanism is to set yourself up to be manipulated and deceived. We need to examine the tactic of denial as something very different from the psychological defense of denial.
Denial as a defense mechanism is how the mind copes emotionally in the fall-out of a catastrophic event, major loss, or with anxiety. The woman who finds herself suddenly widowed may deny for awhile that her husband is dead. Or she may simply feel numb and unable to cry for weeks or months. This is because she can't deal with all the emotions of loss and shock all at once. Denial as a defense is how our minds protect us from overwhelming situations that we aren't equipped at the time to deal with emotionally.
This is something very different from denial as a tactic. George K. Simon, "In Sheep's Clothing", points out:
"...this is when the aggressor refuses to admit that they've done something harmful or hurtful when they clearly have. It's a way they lie (to themselves as well as others) about their aggressive intentions. This 'Who...Me?' tactic invites the victim to feel unjustified in confronting the aggressor about the inappropriateness of a behavior. It's also the way the aggressor gives him/herself permission to keep right on doing what they want to do." pg. 98
Denial as a lying tactic of manipulation is another in the list of tactics covert-aggressive manipulators (usually character-disordered individuals) use very frequently. Mr. Simon has kindly laid out a list of eighteen of the most common tactics. He calls that a short list. He stresses the importance of differentiating between denial as a defense and denial as a tactic to hide aggressive intent. Simon sums up the tactic thusly:
"In short, when Jeff [a juvenile caught in the act of bullying] is denying, he's not defending in any way, he's mainly fighting. He's not in a psychological state, he's employing a tactic, and he's very aware of what he's doing. The tactic he's using is often called denial, but it's really just another way of lying. And he's lying for the reasons people commonly lie -- to get out of trouble." pg. 94
I am sure you have many memories flooding into your mind right now of the times the narcissist has flatly denied their bad behavior, the effects of their bad behavior, and their bad intent behind the bad behavior. You are remembering how they managed to turn the whole situation around so that you were made to feel like you were the aggressor for not believing their denial...their lie. They put on their sweet angel face and deny, deny, deny until you lose the will to continue the fight. For that is what this creep is doing. Fighting. Fighting for his way. Fighting for his "right" to keep right on doing what he wants to do, all consequences to you be damned.
By his insistent denials you have often been made to feel like the bad guy. For trying to get an accounting from him for his actions you have succumbed to the accusation that you're being judgmental, unfair, bullying. So you gave up. You bought the lie that you are the mean one and he is innocent. Who would insist so tenaciously on their innocence except the innocent? Or so you rationalize. You are unwilling to believe that he can look you in the eye and lie his ass off from here to eternity. You want to believe that something about him, and about this relationship, is real...so you succumb his denials.
Or perhaps you allow yourself to know that his behavior was bad and destructive, but you tell yourself that deep down he's really hurting so he is "in denial" because he can't face his own pain. This is never the case with the character-disordered. He is not "in pain". He has no anxiety about his bad behavior whatsoever. He is totally cool with how he is. The only thing he isn't cool with is that you're not accepting his behavior. He is trying to get a pass from you by this blatant denial of his actions. He has no intention of stopping what he is doing. He will buy himself another day by simply denying he did what he did. It is so childish that it is rather a wonderment that we fall for this as often as we do when this is done by an adult. We want to believe that the person in front of us is basically good. That they are basically honest. That they are not fighting with us in this moment.
Teach yourself to recognize when someone is covertly fighting for their own way. Never fall for the belief that the narcissist is in some sort of psychic pain which prevents them from knowing how their behavior affects those around her. She has no problem, no conflict in her own mind with her behavior. She is justified fully in her mind for what she does no matter the destruction it brings down on herself and others. Her only problem is with your perceptions of her behavior. That is what she is trying to deal with as she employs her massive denial of her misdeeds. You are the problem...not her. She is not fighting to repress some deep psychological pain. She is fighting to force you to repress your own pain and your own perception so she can carry on unpunished while doing what ever the hell she wants to do.