In this paper a comprehensive theory of vowel reduction is presented based on a large amount of experimental data gathered by Van Bergem (1995b). The schwa, playing a major role in the process of vowel reduction, is often thought to be a vowel that is produced with a 'neutral' vocal tract. This view is shown to be wrong. The schwa appears to be a vowel that is completely assimilated with its phonemic context; its vowel colour can vary widely. As a consequence, vowel reduction should not be interpreted as centralization, but as contextual assimilation. Two types of vowel reduction are discussed: acoustic reduction and lexical reduction. These can very well be interpreted as two intermediate stages in the process of the sound change 'full vowel -> schwa'.