Psalm 16 is referred to in its superscription as a mikhtam. "The term remains unexplained, though it always stands in the superscription of Davidic prayers occasioned by great danger (see Psalm 56-60)" (Zondervan NIV Study Bible, note on Psalm 16). The Septuagint renders the word as the Greek steloprapha, meaning "an inscription on a slab." Mikhtam is possibly related to the similar-sounding word mikhtav, meaning "writing" in Isaiah 38:9. Perhaps these particular psalms were originally written not as songs but as poems.

David begins Psalm 16 with a petition for protection and deliverance to God in whom he has placed his trust (verse 1). David then reflects in verses 2-3 on the basis on which God hears him: 1) he has confessed God as the Lord of his life; 2) he recognizes that whatever good he has comes only from God and not from himself; and 3) he honors and takes joy in the "saints" or "holy ones"—the other followers of the true God.

David thinks next about the sorrows men bring on themselves when they chase after false gods (verse 4). Indeed, the religions of the cultures surrounding Israel in his day included some obvious examples of this. "If he had chosen the god Moloch of the Canaanites, for example, he would have had to sacrifice one of his babies to that god (Lev. 20:2). If he had gone to live in Carthage, and had adopted its religion, he would have had to participate in human sacrifice. Obviously he shrank in horror from the very idea of both practices" (Knight, Psalms, comments on Psalm 16:1-11). Of course, David likely meant much more than this. False religion has spawned many wrong concepts and practices that lead mankind away from true happiness.

David then addresses God again, saying, "You are the portion of my inheritance and my cup; You maintain my lot" (verse 5). "The boundary lines have fallen for me in pleasant places" (verse 6). Several words here recall the apportioning of the Promised Land to Israel: "chosen portion," "inheritance," "lot," "boundary lines." The Nelson Study Bible comments that "David had an ancestral inheritance in the land. As king, he also had extensive royal holdings. But he realized that no inheritance was greater than his relationship with Almighty God" (note on verses 5-8).

In verse 10, where the NKJV has "You will not leave my soul in Sheol," the NIV has "You will not abandon me to the grave." This could be understood as meaning either that God will not allow David to go to the grave in his present circumstances or that, even if David dies, God will resurrect him from the grave. The latter seems to be intended by what follows: "Nor will you allow your Holy One to see corruption" or, as the NIV translates it, "decay." Yet this reference to the Holy One was in fact a prophecy of the Messiah. "If this could be said of David—and of all those godly Israelites who made David's prayer their own—how much more of David's promised Son! So Peter quotes vv. 8-11 and declares that with these words David prophesied of Christ and his resurrection (Acts 2:25-28...)" (Zondervan, note on Psalm 16:9-11). Indeed, Jesus is more exactly meant by these verses because, unlike David, He was resurrected before His body started to decay. As the apostle Paul explained in Acts 13:35-36: "Therefore He also says in another Psalm: 'You will not allow Your Holy One to see corruption.' For David, after he had served his own generation by the will of God, fell asleep, was buried with his fathers, and saw corruption; but He whom God raised up saw no corruption."

David concludes this psalm by expressing confidence that God will show him the way to eternal life, the "path of life" in God's presence (verse 11), which he describes as full of joy and pleasure forever.