In the Serial Reaction Time (SRT) task, participants respond to a set of stimuli the order of which is apparently random, but which consists of repeating sub-sequences. Participants can become sensitive to this regularity, as measured by an indirect test of reaction time, but can remain apparently unaware of the sequence, as measured by direct tests of prediction or recognition. Some researchers have claimed that this learning may take place by observation alone. We suggest that observational learning may be due to explicit acquired knowledge of the sequence, and is not mediated by the same processes which give rise to learning by action. In Expt 1, we show that it is very difficult to acquire explicit sequence knowledge under dual task conditions, even when participants are told that a regular sequence exists. In Expt 2, we use the same conditions to compare octors, who respond to the sequence during learning, and observers, who merely watch the stimuli. Furthermore, we manipulate the salience of the sequence, in order to encourage learning. There is no evidence of observational learning in these conditions, despite the usual effects of learning being demonstrated by octors. In Expt 3, we show that observational learning does occur, but only when observers have no secondary task and even then only reliably for a sequence which has been made salient by chunking subcomponents. We conclude that sequence learning by observation is mediated by explicit processes, and is eliminated under conditions which support learning by action, but make it difficult to acquire explicit knowledge.