Volume II of this Manual deals with Indo-European nominal and verbal morphology; the morphology of the pronouns will be dealt with in volume III. The treatment of nominal and verbal morphology is preceded by an introduction in which the authors present their theory of root formation in Indo-European and their view of particular, idiosyncratic grammatical mechanisms. The description and reconstruction of the respective word classes follows the procedure based on F.R. Adrados' theory of the gradual dialectalization of Indo-European. The starting point is the reconstruction of nominal and verbal morphology at the level of "Indo-European III," i.e. the linguistic stage following the separation of the Anatolian group from the rest of Indo-European. Subsequently, a description is offered of the situation of "Indo-European II," i.e. the linguistic stage prior to the separation of the Anatolian languages. Finally, a reconstruction of "Indo-European I," the pre-inflectional stage of Indo-European, is attempted.