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Three experiments demonstrated that situational information contributes to the categorization of functional object categories, as well as to inferences about these categories. When an object was presented in the context of setting and event information, categorization was more accurate than when the object was presented in isolation. Inferences about the object similarly became more accurate as the amount of situational information present during categorization increased. The benefits of situational information were higher when both setting and event information were available than when only setting information was available. These findings indicate that situational information about settings and events is stored with functional object categories in memory. Categorization and inference become increasingly accurate as the information available during categorization matches situational information stored with the category.