Our ability to induce the general from the specific is a hallmark of human cognition. Inductive reasoning tasks ask participants to determine how strongly a set of premises (e.g., Collies have sesamoid bones) imply a conclusion (Dogs have sesamoid bones). Here, we present evidence for an abductive theory of inductive reasoning, according to which inductive strength is determined by treating the conclusion as an explanation of the premises, and evaluating the quality of that explanation. Two inductive reasoning studies found two signatures of explanatory reasoning, previously observed in other studies: (1) an evidential asymmetry between positive and negative evidence, with observations casting doubt on a hypothesis given more weight than observations in support; and (2) a latent scope effect, with ignorance about potential evidence counting against a hypothesis. These results suggest that inductive reasoning relies on the same hypothesis evaluation mechanisms as explanatory reasoning.