An analysis is made of the settlement interaction between two identical piles in an elastic mass and the increase in settlement of each pile due to interaction is expressed in terms of an interaction factor a. It is then shown that, for symmetrical pile groups (those in which the piles settle equally and are also equally loaded), the increase in settlement due to interaction may be obtained by superposition of the values of a for the individual piles in the group. On the assumption that superposition also holds for any general free standing pile group, the be- haviour of pile groups is analysed for the case of a rigid pile cap (equal settlement of all piles) and a flexible pile cap (equal load in all piles). For the case of a rigid pile cap, values are obtained for the ratio of the settlement of the group to the settlement of a single pile carrying the same total load (the group reduction factor Rc), and the load distribu- tion within the group. For the case of a flexible pile cap, values of the maximum settlement and maximum differential settlement are given. The influence of pile spacing, pile length, type of group, depth of layer and Poisson’ s ratio of the layer on the settlement behaviour of pile groups is examined. For a pile group in an ideal elastic two- phase soil, it is shown that, as with a single pile, the major proportion of the total final settlement generally occurs as immediate settlement. Comparisons are made between reported observa- tions on the behaviour of pile groups from model and field tests and the behaviour predicted by the theory. It is found that, as well as predicting the correct trends, the theory gives quantitative values which are in reasonable agreement with the observed values.