takes a radically different view. It treats dialogue as the problem of inferring a user's intentions based on what is said. The dialogue is modelled as a probabilistic network and the input speech acts are observations that provide evidence for performing Bayesian inference. The result is a system which is much more robust to speech recognition errors and for which a dialogue strategy can be learned automatically using reinforcement learning. The thesis describes both the architecture, the algorithms needed for fast real-time inference over very large networks, model parameter estimation and policy optimisation. This ground-breaking work will be of interest both to practitioners in spoken dialogue systems and to cognitive scientists interested in models of human behaviour.