One of McKenna's ideas is known as Novelty theory. It predicts the ebb and flow of novelty in the universe as an inherent quality of time. McKenna developed the theory in the mid-1970s after his experiences in the Amazon at La Chorrera led him to closely study the King Wen sequence of the I-Ching. Novelty theory involves ontology, extropy, and eschatology.

The theory proposes that the universe is an engine designed for the production and conservation of novelty. Novelty, in this context, can be thought of as newness, or extropy (a term coined by Max More meaning the opposite of entropy). According to McKenna, when novelty is graphed over time, a fractal waveform known as "timewave zero" or simply the "timewave" results. The graph shows at what time periods, but never at what locations, novelty increases or decreases.

Considered by some to represent a model of history's most important events, the universal algorithm has also been extrapolated to be a model for future events. McKenna admitted to the expectation of a "singularity of novelty", and that he and his colleagues projected many hundreds of years into the future to find when this singularity (runaway "newness" or extropy) could occur. Millenarians give more credence to Novelty theory as a way to predict the future (especially regarding 2012) than McKenna himself. The graph of extropy had many enormous fluctuations over the last 25,000 years, but amazingly, it hit an asymptote at exactly December 21, 2012.[18] In other words, entropy (or habituation) no longer exists after that date. It is impossible to define that state. The technological singularity concept parallels this, only at a date roughly three decades later. According to leading expert Ray Kurzweil), another concept called cultural singularity (essentially cultural dissolution, or language dissolution, as in the novel Just a Couple of Days), parallels this as well.