Research Findings: Young children's relationships with their sisters and brothers offer unique and important opportunities for learning about emotions and developing emotional understanding. Through a critical analysis, this article examines sibling interaction in 3 different but normative contexts (conflict/conflict management, play, and sibling-parent interaction) in order to elucidate the processes by which emotional understanding and emotion regulation develop. The results of recent research and theoretical frameworks are used to explore the ways in which sibling relationships are effective contexts for the development of children's emotional understanding, including identifying emotions, decoding the emotions of others, and anticipating the emotional responses of others in particular situations; emotion regulation; and the use of emotional understanding to build (or impede) relationships and affect the behaviors of others. Practice or Policy: Implications from the current analysis include methods for harnessing the potential of children's growth in emotional understanding through their encounters with siblings to affect positive outcomes for child development.