Three experiments examined developmental change in children's understanding of regret and relief, two second-order emotions whose quality depends on a comparison between reality and "what might have been." In Experiment 1, participants 7 years of age and older, but not 5-year-olds, made regret-related emotion-response judgments that took into account a comparison of reality with its alternatives. In Experiment 2, 5-year-olds judged that an individual would feel better, rather than worse, when a counterfactual outcome was better than what actually occurred (the opposite of the pattern found with older children and adults). Experiment 3 focused on the understanding of relief. In contrast to the findings from Experiment I, the 7-year-olds in Experiment 3 made their judgments solely on the basis of what actually occurred.