Tool use is central to interdisciplinary debates about the evolution and distinctiveness of human intelligence, yet little is actually known about how human conceptions of artifacts develop. Results across these two studies show that even 2-year-olds approach artifacts in ways distinct from captive tool-using monkeys. Contrary to adult intuition, children do not treat all objects with appropriate properties as equally good means to an end. Instead, they use social information to rapidly form enduring artifact categories. After only one exposure to an artifact's functional use, children will construe the tool as "for" that particular purpose and, furthermore, avoid using it for another feasible purpose. This teleo-functional tendency to categorize tools by intentional use represents a precursor to the design stance--the adult-like tendency to understand objects in terms of intended function--and provides an early foundation for apparently distinctive human abilities in efficient long-term tool use and design.