A study investigated children's ability to understand the use of deictic terms in oral and written language. The three deictic categories examined were pronouns (I, you), locatives (this, here), and motion verbs (come, go). Three groups of 24 second grade students completed an oral language task, a written language task, and a picture selection task. Results indicated that written language tasks were more difficult for children than were comparable oral language tasks. Comparisons between the deictic categories showed that some were easier for children to interpret than others. Comparisons between pragmatically different discourse contexts showed that children found it easier to interpret deictic terms when they were participants than when they were merely observers of a conversation. Interpreting deictic terms in written texts that appear to be addressed to the reader was as difficult for children as interpreting deictic terms in written texts representing quoted dialogue. The difficulty children had in interpreting the terms appeared to stem primarily from (1) the necessity of adopting someone else's perspective in particular discourse contexts, (2) the increased processing demands of tasks that require simultaneous attention to more than one variable, and (3) the artificiality of particular kinds of written texts such as those that are given to beginning readers. (Author/FL)