This report describes the research, design and implementation work carried out in building the CLARE system at SRI International, Cambridge, England. CLARE was designed as a natural language processing system with facilities for reasoning and understanding in context and for generating cooperative responses. The project involved both further development of SRI's Core Language Engine (Alshawi, 1992, MIT Press) natural language processor and the design and implementation of new components for reasoning and response generation. The CLARE system has advanced the state of the art in a wide variety of areas, both through the use of novel techniques developed on the project, and by extending the coverage or scale of known techniques. The language components are application-independent and provide interfaces for the development of new types of application.