When to use abstract class and when to use interface ?

Here are some recommendations to help you to decide whether to use an interface or an abstract class to provide polymorphism for your components.

• If you anticipate creating multiple versions of your component, create an abstract class. Abstract classes provide a simple and easy way to version your components. By updating the base class, all inheriting classes are automatically updated with the change. Interfaces, on the other hand, cannot be changed once created. If a new version of an interface is required, you must create a whole new interface.
• If the functionality you are creating will be useful across a wide range of disparate objects, use an interface. Abstract classes should be used primarily for objects that are closely related, whereas interfaces are best suited for providing common functionality to unrelated classes.
• If you are designing small, concise bits of functionality, use interfaces. If you are designing large functional units, use an abstract class.
• If you want to provide common, implemented functionality among all implementations of your component, use an abstract class. Abstract classes allow you to partially implement your class, whereas interfaces contain no implementation for any members.

A good way to distinguish between a case for the one or the other has always been the following:

1. Are there many classes that can be "grouped together" and described by one noun? If so, have an abstract class by the name of this noun, and inherit the classes from it. (A key decider is that these classes share functionality, and you would never instantiate just an Animal... you would always instantiate a certain kind of Animal: an implementation of your Animal base class)
Example: Cat and Dog can both inherit from abstract class Animal, and this abstract base class will implement a method void Breathe() which all animals will thus do in exactly the same fashion. (I might make this method virtual so that I can override it for certain animals, like Fish, which does not breath the same as most animals).

2. What kinds of verbs can be applied to my class, that might in general also be applied to others? Create an interface for each of these verbs.
Example: All animals can be fed, so I will create an interface called IFeedable and have Animal implement that. Only Dog and Horse are nice enough though to implement ILikeable - I will not implement this on the base class, since this does not apply to Cat.

As said by someone else's reply: the main difference is where you want your implementation. By creating an interface, you can move your implementation to any class that implements your interface.
By creating an abstract class, you can share implementation for all derived classes in one central place, and avoid lots of bad things like code duplication.