This study examined the development of social-pragmatic comprehension in 170 Finnish four- to eight-year-old children. The children were asked to respond to socially and contextually demanding questions targeting their social-pragmatic language processing, and to explain their correct answers in order to elicit their awareness of how they had derived the answers from the context. The results showed that the number of correct answers increased especially between the ages of four and seven years. We found that questions demanding contextual processing without mind-reading were the easiest to understand, followed by questions demanding processing of feelings of others and false beliefs. The questions demanding understanding of relevant language use and processing of contextual factors including mental states and intentions were the most challenging for the children. Between four and five years of age there was a remarkable developmental phase in children’s ability to give proper explanations.