As new unanticipated items are added to a memory, it must be able to reorganize itself, integrating the new items into its structure. The reorganization process must maintain the memory's structure and also build up the knowledge retrieval strategies need to search that structure. This study will present an algorithm for knowledge‐based memory reorganization. Included in that algorithm are processes for directed generalization and generalization refinement. A fact retrieval system called CYRUS which uses the algorithm is also presented. Conclusions are (...) drawn about maintaining accessibility in a conceptual memory, organizing generalized knowledge with respect to specific knowledge, and expected retrieval failures due to change over time in the memory's organization. (shrink)