The Thermocontextual Interpretation (TCI) is proposed here as an alternative to existing interpretations of physical states and time. Prevailing interpretations are based on assumptions rooted in classical mechanics. Logical implications include the determinism and reversibility of change, and an immediate conflict. Determinism underlies causality, but causality implies a distinction between cause and effect and an arrow of time, conflicting with reversibility. Prevailing interpretations also fail to explain the empirical irreversibility of wavefunction collapse without untestable and untenable metaphysical implications. They fail to reconcile nonlocality and relativity without invoking superdeterminism or unexplained superluminal correlations. The Thermocontextual Interpretation defines a system’s state with respect to its actual surroundings at a positive ambient temperature. The TCI bridges existing physical interpretations and thermodynamics as special cases, which define states either with respect to an absolute-zero reference or with respect to a thermally equilibrated reference. The TCI defines system time as a complex property of state spanning both reversible mechanical time and irreversible thermodynamic time, and it distinguishes between system time and the reference time of relativity and causality, as measured by an observer’s clock. And, the TCI provides a physical explanation for nonlocality, consistent with relativity, without hidden variables, superdeterminism, or “spooky action.”