Generating and evaluating explanations is spontaneous, ubiquitous and fundamental to our sense of understanding. Recent evidence suggests that in the course of an individual's reasoning, engaging in explanation can have profound effects on the probability assigned to causal claims, on how properties are generalized and on learning. These effects follow from two properties of the structure of explanations: explanations accommodate novel information in the context of prior beliefs, and do so in a way that fosters generalization. The study of explanation thus promises to shed light on core cognitive issues, such as learning, induction and conceptual representation. Moreover, the influence of explanation on learning and inference presents a challenge to theories that neglect the roles of prior knowledge and explanation-based reasoning.