Background: Narrative thought is a primary mode of human cognition that underpins key human capabilities such as meaning-making and social-psychological understanding. Aims: We sought to further our understanding of the development of narrative thought during adolescence, particularly in terms of the structure and content of narrative interpretations. Sample: Participants were 151 grade 4 to grade 12 students from six schools in a major urban centre in Western Canada. They included average and high-average students. Methods: A cross-sectional design was used with four age groups: 10, 12, 14 and 17 years. Participants read a short story incorporating two substories and multiple layers of meaning. They then summarized it, described the two main characters, generated story morals and answered multiple choice interpretation questions. Responses were scored for both structural complexity and social-psychological content of narrative thought. Multivariate and univariate analyses of variance were conducted to identify developmental trends. Results: A clear developmental pattern in structural complexity was discerned in which students were increasingly able to understand complex multiple layers of meaning within a story. A striking shift in social-psychological thought was also identified as students demonstrated understanding that moved from an intentional focus on immediate and specific mental states to an increasingly interpretive focus on enduring states, character traits and second-order psychological interpretations. Conclusion: Significant transformation occurs during adolescence in the structure and content of narrative thought as well as in capacity for the fundamental human endeavour of meaning-making.