To investigate the role of early context in theory of mind development, institutionalized children living in a boarding home (n = 34) in Turkey were compared to home-reared children coming from low (n = 32) and middle socioeconomic backgrounds (n = 44). Theory of mind was assessed with one deception and three false belief tasks; Peabody PVT and Raven CPM were administered to control for language and nonverbal intelligence. Results indicated a context effect whereby home-reared children performed better than institution-reared children on theory of mind tasks. Hierarchical regression analysis further revealed that institution rearing/adult-child ratio predicted theory of mind performance even after age, socioeconomic background, language and nonverbal intelligence were accounted for. Findings suggest the significance of adult-child interaction for theory of mind development.