This paper discusses two problems central to the interpretation of utterances: determining the relationship between actions described in an utterance and events in the world, and inferring the “state of the world’’ from utterances. Knowledge of the language, knowledge about the general subject being discussed, and knowledge about the current situation are all necessary for this. The problem of determining an action referred to by a verb phrase is analogous to the problem of determining the object referred to by a noun phrase. This paper presents an approach to the problems of verb phrases resolution in which knowledge about language, the problem domain, and the dialog itself is combined to interpret such references. Presented and discussed are the kinds of knowledge necessary for interpreting references to actions, as well as algorithms for using that knowledge in interpreting dialog utterances about ongoing tasks and for drawing inferences about the task situation that are based on a given interpretation.