In this study, the author examined the relationship between theory-of-mind understanding and preschool-aged children's peer-related social competence. One hundred eleven 3- to 5-year-old children (48 boys, 63 girls) participated in 2 theory-of-mind tasks designed to assess their understanding of false belief. Teachers rated children's peer-related social behavior in terms of prosocial behavior, aggressive or disruptive behavior, and shy or withdrawn behavior. Results indicated that, after controlling for age, theory-of-mind understanding significantly predicted aggressive or disruptive behavior for boys and prosocial behavior for girls. Theory-of-mind understanding also was related to lower scores of shy or withdrawn behavior for boys. Results are discussed in terms of the gender differences in the factors contributing to early peer competence. (Contains 6 tables and 1 figure.)