Three studies are presented which examine the degree to which children engage in magical thinking. We suggest that this is not a monolithic question that can be answered by a simple ‘yes' or ‘no’, but involves a number of different facets, including parental input, children's spontaneous beliefs and children's responses to magical events. Conceptions about children's beliefs in magical and fantasy figures were assessed by means of a parent survey. Parents reported that children believe in the reality of a number of fantasy figures and that parents encourage these beliefs to some degree. In Study 2,4‐ and 5‐year‐old children made a clear distinction between possible and impossible transformations of animals and did not invoke magical means to produce any outcome. In Study 3 children were asked if a magician could cause certain animal transformations. Here, the 4‐ and 5‐year‐olds made no distinction between possible and impossible events, reporting that for a magician none of these events was impossible. Few children said that magicians used trickery, instead suggesting that ‘real’ magic was involved. Taken together these studies suggest that children hold a belief in magic, but not an overwhelming