There are two general sources of ambiguity in ordinary discourse. The first involves alternative interpretations that arise from either lexical or syntactic ambiguity. The second arises from the nature of discourse itself; How do people use the meanings of words, the meanings of sentences and contextual information to infer speakers intentions? The focus is on how people combine linguistic meanings with contextual information to understand three general types of language use: (1) Irony/sarcasm: What makes an utterance ironic or sarcastic? A theory is proposed that literal meanings are employed to remind listeners of the objects of irony and sarcasm in order to communicate the speaker's attitude toward those objects. The theory is intended to account for both comprehension and production. (2) Metaphors: A new theory of metaphor comprehension is proposed whereby metaphors function as novel re- categorizations of concepts. A series of experiments is planned to investigate the nature of such novel categorizations and to explore the reciprocal relations between similarity and classification processes. (3) Idioms of varying types. A variety of methods and paradigms will be utilized: verification latency, comprehension latency, cross-modal priming, paragraph and sentence completion and judgments of various dimensions of ironical, metaphoric and idiomatic language use. The overall goal is to discover how word and sentence meanings interact with contextual information to produce discourse comprehension. This is a necessary step towards an adequate understanding of language use and comprehension in general, which in turn is required for an understanding of language pathologies.