Many psychological theories posit foundational links between two fundamental constructs: (1) our ability to produce, perceive, and represent action; and (2) our ability to understand the meaning and motivation behind the action (i.e. Theory of Mind; ToM). This position is contentious, however, and long-standing competing theories of social-cognitive development debate roles for basic action-processing in ToM. Developmental research is key to investigating these hypotheses, but whether individual differences in neural and behavioral measures of motor action relate to social-cognitive development is unknown. We examined 3- to 5-year-old children's (N = 26) EEG mu-desynchronization during production of object-directed action, and explored associations between mu-desynchronization and children's behavioral motor skills, behavioral action-representation abilities, and behavioral ToM. For children with high (but not low) mu-desynchronization, motor skill related to action-representation abilities, and action-representation mediated relations between motor skill and ToM. Results demonstrate novel foundational links between action-processing and ToM, suggesting that basic motor action may be a key mechanism for social-cognitive development, thus shedding light on the origins and emergence of higher social cognition.