Inferencing is essential for effective communication for two reasons. Firstly, the conventional meaning of lexis is not always a clear indicator of the intended message of speakers/ writers (e.g. Grice, 1975). Secondly, �discourse rarely provides us with a fully explicit description of a situation� (Eysenck, 1990: 224); therefore, we usually have to fill in the missing information (see also Clark & Clark, 1977: 96-98). It seems wise then for foreign language teachers and materials writers to take account of the clues and procedures involved in language interpretation. But how is inferencing achieved? That is, how do we understand more than (or even something different from) what the actual words seem to denote? What knowledge and clues do we use? What processes take place in our minds? As far as ELT is concerned, what are the implications for decision-making, materials-writing and classroom practice? In other words, what is it that teachers and materials writers need to know about inferencing, and how can they translate this knowledge into teaching materials and procedures? In Part 1 I discuss the clues provided by speakers/writers, as well as the clues and thinking processes used by listeners/readers in order for successful inferencing to take place. This outline will draw on Pragmatics, Discourse Analysis and Psycholinguistics. I will also provide examples of (in)effective communication, and will discuss the use of specific clues and procedures. In Part 2, I briefly discuss the implications for the learning/ teaching of English as a foreign language.