Capacities for abstract thinking and problem-solving are central to human cognition. Processes of abstraction allow the transfer of experiences and knowledge between contexts helping us make informed decisions in new or changing contexts. While we are often inclined to relate such reasoning capacities to individual minds and brains, they may in fact be contingent on human-specific modes of collaboration, dialogue, and shared attention. In an experimental study, we test the hypothesis that social interaction enhances cognitive processes of rule-induction, which in turn improves problem-solving performance. Through three sessions of increasing complexity, individuals and groups were presented with a problem-solving task requiring them to categorize a set of visual stimuli. To assess the character of participants’ problem representations, after each training session, they were presented with a transfer task involving stimuli that differed in appearance, but shared relations among features with the training set. Besides, we compared participants’ categorization behaviors to simulated agents relying on exemplar learning. We found that groups performed superior to individuals and agents in the training sessions and were more likely to correctly generalize their observations in the transfer phase, especially in the high complexity session, suggesting that groups more effectively induced underlying categorization rules from the stimuli than individuals and agents. Crucially, variation in performance among groups was predicted by semantic diversity in members’ dialogical contributions, suggesting a link between social interaction, cognitive diversity, and abstraction.