Adaptive network and exemplar-similarity models were compared on their ability to predict category learning and transfer data. An exemplar-based network (Kruschke, 1990a, 1990b, 1992) that combines key aspects of both modeling approaches was also tested. The exemplar-based network incorporates an exemplar-based category representation in which exemplars become associated to categories through the same error-driven, interactive learning rules that are assumed in standard adaptive networks. Experiment 1, which partially replicated and extended the probabilistic classification learning paradigm of Gluck and Bower (1988a), demonstrated the importance of an error-driven learning rule. Experiment 2, which extended the classification learning paradigm of Medin and Schaffer (1978) that discriminated between exemplar and prototype models, demonstrated the importance of an exemplar-based category representation. Only the exemplar-based network accounted for all the major qualitative phenomena; it also achieved good quantitative predictions of the learning and transfer data in both experiments. One of the major current models for explaining performance in arbitrary category learning paradigms is the context model proposed by Medin and Schaffer (1978) and elaborated by Estes (1986a) and Nosofsky (1984, 1986). According to the context model, people represent categories by storing individual exemplars in memory and make classification decisions on the basis of similarity comparisons with the stored exemplars. The context model has proved to be successful at predicting quantitative details of classification performance in a wide variety of experimental settings and has compared favorably with a variety of alternative models, including prototype, independent-feature, and certain logical-rule based models (see Medin & Florian, in press, and Nosofsky, in press-a, in press-b, for reviews). However, some shortcomings of the context model were recently demonstrated in series of probabilistic classification learning experiments conducted by Gluck and Bower (1988a)