In naturally-occurring collaborative dialogues, the participants often share the responsibility of taking initiative in the dialogue. Thus, in order for a system to interact with human agents in a natural and coherent fashion, it must be able to recognize and provide cues when shifts in initiative are intended, and to take initiative into account in interpreting user utterances and in generating responses to such utterances. In this paper, we argue that it is necessary to distinguish between task initiative, which indicates the agent who is currently actively involved in planning toward accomplishing the agents’ task, and dialogue initiative, which indicates the agent who has the lead in determining the current discourse focus. We identify a set of cues which may indicate changes in initiative that can be inferred based on linguistic and domain knowledge alone, and show how these cues can be used to determine the distribution of task and dialogue initiatives at the end of each dialogue tum. In addition, we show that the effects of task and dialogue initiatives on the dialogue system’s response generation process are twofold: they determine which subcomponents of the dialogue system may be selected to address the problem of response generation, and they affect what the selected subcomponent will include in its response to the user’s utterances.