Background: Pragmatic language impairment has recently been the subject of a number of studies that attempted to illuminate classification and diagnostic issues, and identify the profile of children with pragmatic language difficulties. Although much progress has been made, the nature of pragmatic difficulties remains unclear. Aims: To contrast typically developing children with those with pragmatic difficulties and specific language impairment as well as their ability to produce and comprehend pragmatic inferences about given or presupposed knowledge in mental state verbs; and to explore the general hypothesis that children with pragmatic difficulties make some, but not all, of the pragmatic inferences necessary for successful communication. Methods & Procedures: Study groups consisted of 18 children with pragmatic language difficulties, 28 children with specific language impairment and 40 typically developing children. The groups were matched on non-verbal intelligence and age and differed in verbal intelligence, language achievement and pragmatic ability. Outcomes & Results: The language-impaired groups performed significantly more poorly than typically developing children on all mental verb measures. In addition, significant differences between specific language impairment and pragmatic difficulties groups were found in composite score performance, but not on individual test performance. Conclusions: Both inferential mental verb tasks (pragmatics) and non-inferential mental verb tasks (semantics) were more difficult for the children with language impairments compared with typically developing peers. Inferential and non-inferential abilities showed significant differences between the two language-impaired groups in favour of the children with specific language difficulties. Children's Communication Checklist scales in conjunction with mental verb measures were found to classify the three groups well. A questionnaire is appended.(Contains 5 tables and 1 figure.)