This target article presents a new computational theory of explanatory coherence that applies to the acceptance and rejection of scientific hypotheses as well as to reasoning in everyday life. The theory consists of seven principles that establish relations of local coherence between a hypothesis and other propositions. A hypothesis coheres with propositions that it explains, or that explain it, or that participate with it in explaining other propositions, or that offer analogous explanations. Propositions are incoherent with each other if they are contradictory. Propositions that describe the results of observation have a degree of acceptability on their own. An explanatory hypothesis is accepted if it coheres better overall than its competitors. The power of the seven principles is shown by their implementation in a connectionist program called ECHO, which treats hypothesis evaluation as a constraint satisfaction problem. Inputs about the explanatory relations are used to create a network of units representing propositions, while coherence and incoherence relations are encoded by excitatory and inhibitory links. ECHO provides an algorithm for smoothly integrating theory evaluation based on considerations of explanatory breadth, simplicity, and analogy. It has been applied to such important scientific cases as Lavoisier's argument for oxygen against the phlogiston theory and Darwin's argument for evolution against creationism, and also to cases of legal reasoning. The theory of explanatory coherence has implications for artificial intelligence, psychology, and philosophy.