Five experiments examined whether young children believe a lie tellers' implausible statement about a misdeed when the statement violates their developing knowledge of the reality- fantasy distinction. Findings suggested that 5- and 6-year-olds tended to report that the individual making the implausible statement actually committed the misdeed; 3- and 4-year-olds tended to accept the claim of the protagonist and even had difficulty disbelieving an implausible claim about an inanimate object. (Author/KB)