My paper sets out to demonstrate that Weber's ideal-typical theory of concept formation, subject to certain modifications, is compatible with the principles of philosophical hermeneutics and is therefore a valuable strategy of concept formation for interpretive historical inquiry. The essay begins with a brief recapitulation of the philosophical-hermeneutic approach to the human sciences. I then chart out the affinities as well as the discrepancies between philosophical hermeneutics and Weber's theory of the ideal type. Against this backdrop, I proceed to offer a number of correctives and additions to Weber's theory so as to tighten its fit with philosophical hermeneutics. First, I argue that the ideal type's proper logic of concept formation is a logic of significance rather than a logic of commonality. Second, I claim that the relationship between the various empirical cases to which a given ideal type is (or can be) applied is a Wittgensteinian relationship of family resemblance. Finally, I present two main kinds of epistemological functions that ideal types can fulfill within the framework of historical inquiry: argumentative and orientational-clarificatory.