Conventionally, memory and reasoning are seen as different types of cognitive activities driven by different processes. In two experiments, we challenged this view by examining the relationship between recognition memory and inductive reasoning involving multiple forms of similarity. A common study set (members of a conjunctive category) was followed by a test set containing old and new category members, as well as items that matched the study set on only one dimension. The study and test sets were presented under recognition or induction instructions. In Experiments 1 and 2, the inductive property being generalized was varied in order to direct attention to different dimensions of similarity. When there was no time pressure on decisions, patterns of positive responding were strongly affected by property type, indicating that different types of similarity were driving recognition and induction. By comparison, speeded judgments showed weaker property effects and could be explained by generalization based on overall similarity. An exemplar model, GEN-EX (GENeralization from EXamples), could account for both the induction and recognition data. These findings show that induction and recognition share core component processes, even when the tasks involve flexible forms of similarity.