The present study investigated the development of inferencing in five to seven year old children. The subjects consisted of thirty typically developing children of five, six and seven years, distributed into three groups of ten. Four sets of material were prepared and for each two types of questions were constructed. The questions being of literal and inferential type and equal in number. This was administered on all thirty subjects Male and female were equally represented. The results indicated there was a significant difference in the performance by the five, six, and seven year old children, with the five year olds performing the poorest and the seven year olds performing at ceiling level with the six year olds in between them. Thus, indicating a developmental trend in the development of inferencing skills. The findings are discussed using Kintsch's (1988) construction-integration theory. (Contains 3 tables.)