Social pretend play is considered to be beneficial to literacy development. However, observations in the case study of social pretend play by a boy from the age of 3 to 5 years, showed that at this young age the children's play may also have its limitations with regard to literacy-related features. On the one hand, children create a reciprocal support system for each other's imagination, and develop a metalinguistic capacity by their negotiations. On the other hand, the situation bound nature of this kind of play offers a limited opportunity for planned, extended discourse. It will be argued that a well-defined pedagogy should involve a broad narrative approach to address both potentials and limitations. The analysis as well as a pedagogy of play may benefit from Vygotskyan concepts.