This paper undertakes textual exegesis and rational reconstruction of Mukula Bhaṭṭa’s Abhidhā-vṛttta-mātṛkā, or “The Fundamentals of the Communicative Function.” The treatise was written to refute Ānandavardhana’s claim, made in the Dhvanyāloka, that there is a third “power” of words, vyañjanā (suggestion), beyond the two already accepted by traditional Indian philosophy: abhidhā (denotation) and lakṣaṇā(indication).1 I argue that the explanation of lakṣaṇā as presented in his text contains internal tensions, although it may still be a compelling response to Ānandavardhana.