Simulators are becoming standard equipment for interactive learning environments. They allow for attractive teaching with a large degree of freedom for the learner. However, without proper guidance, the learner easily gets lost in a simulation environment. Providing guidance requires an image of what the learner is doing. Acquiring this image by diagnosing the behaviour of the learner is a complex and resource-intensive task for which yet no general approach exists. In this book, we apply existing ideas and techniques from the field of model-based reasoning and diagnosis to interactive learning environments. We present a framework for subject matter modelling and diagnosis of learner behaviour. The framework defines generic techniques for automatically generating subject matter models from qualitative simulations. A generic model-based engine employs these models for diagnosing the learner's behaviour. The framework provides a powerful and reusable approach to individualising guidance in educational systems.