This study examined neural activity associated with inductive inference using functional Near Infrared Spectroscopy (fNIRS). Induction is a powerful way of generating new knowledge by generalizing known information to novel items or contexts. Two key bases for identifying targets for induction are perceptual similarity, and rules that specify category- relevant features. Similarity- and rule-based induction have been argued to represent distinct mechanisms, such that only rule-based induction requires executive function processes associated with the prefrontal cortex (PFC), namely: active maintenance of representations and inhibition of salient but irrelevant features. Here, we address the lack of direct empirical evidence supporting this possibility by recording PFC activity using fNIRS while adult participants (n=24) performed an inductive inference task. We found that PFC activity during induction was greater when participants had been taught a category-inclusion rule versus when participants could only rely on overall similarity.