Traditional mechanistic accounts of language processing derive almost entirely from the study of monologue. Yet, the most natural and basic form of language use is dialogue. As a result, these accounts may only offer limited theories of the mechanisms that underlie language processing in general. We propose a mechanistic account of dialogue, the interactive alignment account, and use it to derive a number of predictions about basic language processes. The account assumes that, in dialogue, the linguistic representations employed by the interlocutors become aligned at many levels, as a result of a largely automatic process. This process greatly simplifies production and comprehension in dialogue. After considering the evidence for the interactive alignment model, we concentrate on three aspects of processing that follow from it. It makes use of a simple interactive inference mechanism, enables the development of local dialogue routines that greatly simplify language processing, and explains the origins of self-monitoring in production. We consider the need for a grammatical framework that is designed to deal with language in dialogue rather than monologue, and discuss a range of implications of the account. Key Words: common ground; dialogue; dialogue routines; language comprehension; language production; monitoring; perception-behavior link.