This volume contains revised versions of presentations at the International Workshop on Analogical and Inductive Inference (AII '86) held in Wendisch-Rietz, GDR, October 16-10, 1986. Inductive inference and analogical reasoning are two basic approaches to learning algorithms. Both allow for exciting problems and promising concepts of invoking deeper mathematical results for considerable advances in intelligent software systems. Hence analogical and inductive inference may be understood as a firm mathematical basis for a large variety of problems in artificial intelligence. While the papers on inductive inference contain technical results and reflect the state of the art of this well-developed mathematical theory, those devoted to analogical reasoning reflect the ongoing process of developing the basic concepts of the approach. The workshop thus contributes significantly to the advancement of this field.