This book investigates the Verstehen approach, as understood within methodological individualism, i.e. the idea that action must be explained through the understanding of its meaning to an agent. To appraise this approach, the book focuses on many different authors, with particular attention being paid to Friedrich Hayek, one of the most eminent supporters of methodological individualism in the twentieth century. Hayek's contribution to the philosophy of the social sciences and the philosophy of mind is used as a starting point to deal with the theoretical issues related to the understanding of action. By using Hayek in this way, I try at the same time to clarify some aspects of his work that are less well-known. One of the goals is to demonstrate that Hayek's reflections on mind include a very original argument in favor of Verstehen, an argument that has been rather neglected within the philosophy of the social sciences.