Tool use consists of at least two coupled phases of activities, involving multi-step problem solving. It therefore provides an interesting window on the development of planning in goal-directed behavior. This study investigated 2-year-olds' and 3-year-olds' hand use in picking up and subsequently using a tool for displacing a target-object towards a specified goal location. The children had to use a stick (Experiment 1; N = 41 in total) or a cane (hooked stick) that was lying in varying starting orientations (Experiment 2; N = 32 in total). Age differences were found in the way goal-related information in combination with tool-related information influenced the choice of which hand to use in different phases of the task. A view on action planning is developed as a dynamic action-selection process for which actions to take. This process integrates factors that are internal to the child's action system (e.g. motor preferences and dexterity) with external (i.e. sensory) sources of information.