The development of a story grammar represents an attempt to describe the higher order cognitive structures that are used to encode, represent, and retrieve information from stories such as folktales or fables. These structures, defined as a set of rewrite rules, specify the types of information that should occur in stories and the types of logical relations that should connect story components. They guide a listener or reader in determining when information, critical to the cohesiveness of a story, has been omitted from a text or when the logical organization of a story has been deviated from the expected sequence of events. Predictions about story memory have been derived from story grammars and tested in several different studies on story memory. The results of these studies have shown the validity of using a story grammar approach to comprehension. Some of the results, however cannot readily be explained by the rules included in current grammars. (These contradictions and developments necessary for a more comprehensive view of understanding are discussed in the conclusion of the paper.) (Author/AA)