We gratefully acknowledge the important contributions to our thinking about literary interpretation made by members of the Project READI Literature Team, in particular Carol Lee, Sarah Levine, and Joseph Magliano. Other members of the Literature Team include ourselves, Stephen Briner, Jessica Chambers, Rick Coppolla, Julia Emig, Angela Fortune, MariAnne George, Allison Hall, Courtney Milligan, Teresa Sosa, and Mary Pat Sullivan. Project READI (Reading, Evidence, Argumentation in Disciplinary Instruction) is a multi-institution collaboration to improve complex comprehension of multiple forms of text in literature, history, and science. It is supported by the Institute of Education Sciences, U.S. Department of Education, through Grant R305F100007 to University of Illinois at Chicago. The opinions expressed are those of the authors and do not represent views of the Institute or the U.S. Department of Education. In this chapter we address the kinds of inferences that are made when people read literary texts. Literary texts may include a variety of genres, including narratives, science fiction, folk tales, fables, poetry, songs, and historical fiction. Distinctions between literary and “nonliterary” texts may seem obvious. Indeed, there is general consensus that literary texts afford a displacement of meaning (Scholes, 1977, cited in Levine, 2013) or “duplicity of code.” Schraw (1997) characterized literary texts as “narratives that are richly symbolic and include both an interpretable surface meaning and one or more coherent subtexts (i.e., implicit thematic interpretations that run parallel to the explicit surface-level meaning of the text)” (p. 436). In fact, clear distinctions are difficult to make, partly because such distinctions depend upon assumptions about whether meaning is “in the text,” “in the author,” “in the reader,” in the “transaction between reader and text” (Rosenblatt, 1978; 1994), or in the interaction of reader, text, and task, situated in a social and cognitive context (RAND Report, 2002).