This article explores the role of knowledge and understanding in fostering physical literacy, which is considered fundamental to successful participation in physical activity, and to valuing and taking responsibility for engaging in physical activities for life. First, it highlights the place and importance of knowledge and understanding within the broad concept, cognitive domain, and attributes of physical literacy. The type, scope, and progression of knowledge and understanding deemed necessary to foster physical literacy are then explored, with attention paid to knowledge of health within the school context in particular. To conclude, the article outlines selected pedagogical approaches and practical strategies for developing and monitoring such knowledge and understanding.