Learning local regularities in sequentially structured materials is typically assumed to be based on encoding of the frequencies of these regularities. We explore the view that transitional probabilities between elements of chunks, rather than frequencies of chunks, may be the primary factor in artificial grammar learning (AGL). The transitional probability model (TPM) that we propose is argued to provide an adaptive and parsimonious strategy for encoding local regularities in order to induce sequential structure from an input set of exemplars of the grammar. In a variant of the AGL procedure, in which participants estimated the frequencies of bigrams occurring in a set of exemplars they had been exposed to previously, participants were shown to be more sensitive to local transitional probability information than to mere pattern frequencies.