The central task of a future-oriented computational linguistics is the development of cognitive machines which humans can freely talk with in their respective natural language. In the long run, this task will ensure the development of a functional theory of language, an objective method of verification, and a wide range of practical applications. Natural communication requires not only verbal processing, but also non-verbal perception and action. Therefore the content of this textbook is organized as a theory of language for the construction of talking robots. The main topic is the mechanism of natural language communication in both the speaker and the hearer. The content is divided into four parts: Theory of Language, Theory of Grammar, Morphology and Syntax, Semantics and Pragmatics. The book contains more than 700 exercises for reviewing key ideas and important problems. In the Second Edition, changes are most noticeable in Chapters 22-24, which have been completely rewritten. They present a declarative outline for programming the semantic and pragmatic interpretation of natural language communication. The presentation is now simpler and more comprehensive. It is defined as a formal fragment and includes a new control structure, an analysis of spatio-temporal infer-encing, and an analysis of internal matching based on the notion of a task analysis. Examples and explanations which were contained in the old versions of Chapters 22-24 have been moved to the new Appendix. A schematic summary and a conclusion have been added as well.