The theory of discrimination learning developed in Part I* of this paper is extended to more complex learning situations such as those used for differentiating relative from absolute habits. The greater difficulty of learning an absolute discrimination than of learning a relative discrimination is predicted. The theory is also extended to cover cases of transfer. It predicts that under the ordinary training conditions transfer to new stimulus situations will be on a relative basis, and it predicts the type of transfer to be expected under other training conditions. A number of additional established facts of learning and transfer can be deduced from the theory. Methods of testing the adequacy of the theory by new and more crucial experiments are suggested.