Michael Dummett, following an established line of reasoning, has interpreted Frege as a realist. But his claim that Frege was arguing against a dominant idealism is untenable. While there are passages in Frege's writings that seem to support a realistic interpretation, others are irreconcilable with it. The issue can be resolved only by examining the historical context. Frege's thought is, in fact, related to the philosophy of Hermann Lotze. Frege is best regarded as a transcendental idealist in the Lotze‐Kant tradition. His contextual principle is a linguistic version of Kant's principle of the transcendental unity of judgment. By ignoring the historical context Dummett has been led to misinterpret the precise role of the contextual principle in Frege's thought.