In two studies, we assessed children's understanding that pretense involves mental representation. Three-, 4- and 5-year-olds were told stories and asked questions designed to assess their understanding of the role of both knowledge and thinking in pretense. In Study 1, children ware found to understand the role of knowledge in pretense. Study 2 revealed that children of this same age also understand the involvement of thinking in pretense. These results support the view that preschool age children understand that pretense involves mental representation. We discuss the implications of these results for the broader issue of children's understanding of the mind.