&NA;Children's theory of mind underlies their ability to explain and predict human behavior by taking into account a person's thoughts and feelings. It develops in the first 5 years of life, beginning with joint attention in infancy. The 3‐year‐old child understands that there is a difference between thoughts in the mind and things in the world and is aware of people's wants, feelings, and perceptions. The 5‐year‐old child understands false belief, and realizes that thoughts in the mind may not be true. Some recent work investigated individual differences in theory‐of‐mind development, showing antecedents of false‐belief understanding in general language skills, pretend play, and style of family interaction. There is less work on the consequences of typical theory of mind development, but a large body of work demonstrating the consequences of its absence, particularly in autism. The article discusses the implications of this new area of developmental research for clinical practice and describes a screening tool and a teaching manual.