This study examined whether children understand that people selectively conceal or express emotion depending upon the context. We prepared two contexts for a verbal display task for 70 first-graders, 80 third-graders, 64 fifth-graders, and 71 adults. In both contexts, protagonists had negative feelings because of the behavior of the other character. In the prosocial context, children were instructed that the protagonist wished to spare the other character's feelings. In contrast, in the real-emotion context, children were told that the protagonist was fed up with the other character's behavior. Participants were asked to imagine what the protagonists would say. Adults selected utterances with positive or neutral emotion in the prosocial context but chose utterances with negative emotion in the real-emotion context, whereas first-graders selected utterances with negative emotion in both contexts. In the prosocial context, the proportion of utterances with negative emotion decreased from first-graders to adults, whereas in the real-emotion context the proportion was U-shaped, decreasing from first- to third-graders and increasing from fifth-graders to adults. Further, performance on both contexts was associated with second-order false beliefs as well as second-order intention understanding. These results indicate that children begin to understand that people selectively conceal or express emotion depending upon context after 8 to 9 years. This ability is also related to second-order theory of mind.