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Description: There is a debate regarding the function of theory of mind (ToM), the capacity to infer, attribute, and reason about mental states. On the one hand are evolutionary and psychological work suggesting that ToM is greater for competition than cooperation. On the other hand are findings and theories promoting greater ToM for cooperation than competition. We investigate the question of whether ToM is greater for competition than cooperation or vice versa by examining the period of development during which explicit ToM comes online. In two studies, we examined preschool children’s abilities to explicitly express an understanding of false beliefs—a key marker of ToM—and ability to apply that understanding in first-person social interactions in competitive and cooperative contexts. Our findings reveal that preschool children are better at understanding false beliefs and applying that understanding in competitive contexts than in cooperative contexts.