The paper was first published in 1916 in Mitteilungen der Physikalischen Gesellschaft in Zürich, but here for the first time in Physikalische Zeitschrift. All subsequent research on absorption and emission of radiation and the entire discovery of the maser, later the laser, was based on the research presented in the present paper. The paper is also notable for introducing the concept (but not the name) of the photon; Einstein argues that in the interaction of matter and radiation there must be, in addition to the processes of absorption and spontaneous emission, a third process of stimulated emission. If stimulated emission exists then he can derive the Planck distribution for blackbody radiation and without it the same argument implies the invalid Wien-distribution theory. In this paper he derived Planck's original quantum law from a different starting point, he suggested that as well as spontaneous emission and absorption, there could also take place the process of stimulated emission. In 1917 this seemed mainly of theoretical interest; forty years later it was utilized to provide the maser and laser of modern technology.