Compared with standard arithmetic word problems demanding only the direct use of number operations and computations, realistic problems are harder to solve because children need to incorporate "real-world" knowledge into their solutions. Using the realistic word problem testing materials developed by Verschaffel, De Corte, and Lasure ["Learning and Instruction, 4"(4), 273-294, 1994], two studies were designed to investigate (a) Chinese elementary school children's ability to solve realistic word problems and (b) the different effects of two instructional interventions (warning vs. process-oriented) on their performance. The results indicated that, contrasting to the standard problem solving, the participating children demonstrated a strong tendency to exclude real-word knowledge and realistic considerations from their solution processes when solving the realistic problems. Process-oriented instruction, calling for a deep-level processing, was more likely than warning instruction to promote the activation of realistic considerations, but it was not effective at helping children arrive at realistic or correct answers. Finally, the results and their implications for mathematical teaching are discussed. (Contains 3 tables.)