To characterize basic processes of reading comprehension, this report focuses on how the reader's schemata, or knowledge already stored in memory, function in the process of interpreting new information and allowing it to enter and become a part of the knowledge store. The paper first traces the historical antecedents of schema theory, then outlines its basic elements, pointing out problems with current realizations of the theory and possible solutions. Following a consideration of the interplay between the abstracted knowledge embodied in schemata and memory for particular examples, it "decomposes" the comprehension process in order to examine components of encoding (attention, instantiation, and inference) and retrieval (retrieval plans, editing and summarizing, and reconstructive processes). In conclusion, the paper evaluates the contributions of schema theory to the understanding of the comprehension process and speculates on the directions future research should take. (FL)