Humans are able to classify novel items correctly by category; some other animals have also been shown to do this. During category learning, humans group perceptual stimuli by abstracting qualities from similarity relationships of their physical properties. Forming categories is fundamental to cognition and can be independent of a 'memory store' of information about the items or a prototype. The neurophysiological mechanisms underlying the formation of categories are unknown. Using an animal model of category learning, in which frequency-modulated tones are distinguished into the categories of 'rising' and 'falling' modulation, we demonstrate here that the sorting of stimuli into these categories emerges as a sudden change in an animal's learning strategy. Electro-corticographical recording from the auditory cortex shows that the transition is accompanied by a change in the dynamics of cortical stimulus representation. We suggest that this dynamic change represents a mechanism underlying the recognition of the abstract quality (or qualities) that defines the categories.