Effects of two environmental variables, activity type and age groupings, and two child variables, age and handicapping condition, were examined with respect to the engagement of toddlers and preschoolers in a mainstreaming day care center. The construct of engagement is predicated on the assumption that the more time an individual spends attending to and interacting with his or her surroundings, the more opportunities he or she has to learn. A total of 48 children were observed on 8 occasions each during either free play or structured activities. Findings indicated that age had little effect on engagement with adults, but was associated with overall engagement. Engagement with materials was associated with age by grouping interaction. Structured activities promoted engagement with adults and free play promoted engagement with peers. Both children with handicaps and normally developing children engaged with peers more in free play than in structured activities. Children with handicaps spent almost three times as much time observing as playing in free play and over twice as much time observing as playing in structured activities. Younger children were more likely to be engaged with materials in same-age groups, and older children more likely to be engaged with materials in mixed-age groups. Results are discussed in terms of implications for future research and recommendations for practice. (30 references) (Author/RH)