This book constitutes the refereed proceedings of the 7th International Workshop on Algorithmic Learning Theory, ALT '96, held in Sydney, Australia, in October 1996. The 16 revised full papers presented were selected from 41 submissions; also included are eight short papers as well as four full length invited contributions by Ross Quinlan, Takeshi Shinohara, Leslie Valiant, and Paul Vitanyi, and an introduction by the volume editors. The book covers all areas related to algorithmic learning theory, ranging from theoretical foundations of machine learning to applications in several areas.