This paper discusses cooperative learning as a teaching method that uses intrinsic rewards, or rewards that come from within a student, in the education of young children. The developmental perspective of cooperative learning, which suggests that peer interaction, without the use of extrinsic rewards, leads to intellectual and social growth, is based on the theories of Vygotsky and Piaget. This perspective is supported by a growing body of evidence indicating that extrinsic rewards are detrimental to creative functioning. To foster cooperative learning, teachers can: (1) present children with developmentally appropriate activities; (2) encourage social interaction; (3) have children work with peers of mixed abilities; (4) develop activities which provide children with hands-on experience; (5) involve children in the learning process; and (6) provide interesting and open-ended activities. Teachers can follow these seven guidelines by using a project approach to learning in the classroom. The project approach capitalizes on children's differing abilities, revolves around a theme, and allows for an open-ended learning process. The benefits of cooperative learning include stressing cooperation over competition, developing social skills, and providing opportunities for the handicapped child to make a contribution to the group. A list of 14 references is provided. (BC)