Title: Inferring the velocity distribution of nearby stars from Hipparcos data Abstract: We present a three-dimensional reconstruction of the velocity distribution of nearby stars ($\lesssim 100$ pc) using a maximum likelihood density estimation technique applied to the two-dimensional tangential velocities of the stars. The underlying distribution is modeled as a mixture of Gaussian components. The algorithm reconstructs the error-deconvolved distribution function, even when the individual stars have unique error and missing-data properties. We apply this technique to the tangential velocity measurements from a kinematically unbiased sample of 11,865 main sequence stars observed by the Hipparcos satellite. We explore various methods for validating the complexity of the resulting velocity distribution function, including criteria based on Bayesian model selection and minimum coding inference, as well as how accurately our reconstruction predicts the radial velocities of a sample of stars from the Geneva-Copenhagen survey. Thus, we can quantify the information content of the radial velocity measurements, which is interesting in the light of the upcoming Gaia mission. We find that the mean amount of new information gained from a radial velocity measurement of a single star is significant, which strongly argues for a complementary radial velocity survey to Gaia. We also confirm the existence of ``moving groups'' in the velocity distribution of the disk of the Galaxy, quantifying their statistical significance for the first time. We find that the color-magnitude diagrams of most of the moving groups are inconsistent with being trails of evaporating, young clusters, which favors their interpretation as being due to dynamical resonances or non-axisymmetry and time-dependence of the disk potential.