This project continues our interdisciplinary research into computational and cognitive aspects of narrative comprehension. Our ultimate goal is the development of a computational theory of how humans understand narrative texts. The theory will be informed by joint research from the viewpoints of linguistics, cognitive psychology, the study of language acquisition, literary theory, geography, philosophy, and artiﬁcial intelligence. The linguists, literary theorists, and geographers in our group are developing theories of narrative language and spatial understanding that are being tested by the cognitive psychologists and language researchers in our group, and a computational model of a reader of narrative text is being developed by the AI researchers, based in part on these theories and results and in part on research on knowledge representation and reasoning. This proposal describes the knowledge-representation and natural-language-processing issues involved in the computational implementation of the theory; discusses a contrast between communicative and narrative uses of language and of the relation of the narrative text to the story world it describes; investigates linguistic, literary, and hermeneutic dimensions of our research; presents a computational investigation of subjective sentences and reference in narrative; studies children’s acquisition of the ability to take third-person perspective in their own storytelling; describes the psychological validation of various linguistic devices; and examines how readers develop an understanding of the geographical space of a story. This report is a longer version of a project description submitted to NSF. This document, produced in May 2007, is a L ATEX version of Technical Report 89-07 (Buffalo: SUNY Buffalo Department of Computer Science, August 1989), with slightly..