Despite the common intuition that labeling may be the best way to teach a new word to a child, systematic testing is needed of the prediction that children learn words better from labeling utterances than from directive utterances. Two experiments compared toddlers' label learning in the context of hearing words used in directive versus labeling utterances. In Study 1 (N = 64) 24-month-olds learned a novel label equally well from directive and labeling utterances, whereas 18-month-olds only learned in the labeling context. When the novel label was placed at the end of a directive utterance in Study 2 (N = 16), even 18-month-olds were able to learn it. These findings highlight young children's flexibility in interpreting words in a variety of contexts, and the importance of considering the various linguistic and non-linguistic settings where words are encountered.