Understanding literary character is a dynamic process in which the reader's knowledge structures and cognitive and emotional strategies continually interact with textual information. Dynamic effects of reading, such as inferencing or the formation and rejection of hypotheses, can only be described adequately if this interplay between top-down and bottom-up processing of information is examined. From these two sources of information, readers construct mental models not only of fictional situations, time, and space, but also of characters. Throughout the reading process, readers elaborate, modify, or revise character models to incorporate incoming information. A cognitive theory of literary character not only provides a systematic account of the constituent elements of character-reception from both text-related and reader-related sources, but it also proposes a process model that tries to capture the most important distinctive phases of mental-model construction in character-reception. The cognitive approach offers new categories for the analysis of literary character.