This study examined the extent to which preschool teachers used literal and inferential questions during classroom-based shared reading. Specific foci included (a) investigating the association among the level of literal or inferential language in the text, teachers' text-related questions, and children's responses using sequential analysis, and (b) examining the relation between teachers' inferential questioning and children's vocabulary outcomes. Participants included 25 preschool teachers and 159 four-year-old children. Teachers videotaped their whole-class shared reading of an informational narrative text. Teachers and children's extratextual talk was analyzed and children completed standardized vocabulary assessments in fall and spring of the academic year. When reading this informational narrative text, teachers posed, on average, slightly more inferential questions than literal questions. Significant sequential associations were observed between the level of teachers' questions and child responses, with inferential questions consistently eliciting inferential child responses. Few characteristics of teachers' questions were associated with children's vocabulary outcomes. Results suggest that preschool teachers can use inferential questioning to encourage children to participate in conversation at complex, inferential levels; informational texts appear to provide a successful context for this inferential discourse. Implications for teachers and allied professionals are discussed. (Contains 8 tables and 1 figure.)