We present a new algorithm IDS for incremental learning of deterministic finite automata (DFA). This algorithm is based on the concept of distinguishing sequences introduced in (Angluin81). We give a rigorous proof that two versions of this learning algorithm correctly learn in the limit. Finally we present an empirical performance analysis that compares these two algorithms, focussing on learning times and different types of learning queries. We conclude that IDS is an efficient algorithm for software engineering applications of automata learning, such as testing and model inference.