AbstractCategorization is a process that spans all of development, beginning in earliest infancy yet changing as children's knowledge and cognitive skills develop. In this review article, we address three core issues regarding childhood categorization. First, we discuss the extent to which early categories are rooted in perceptual similarity versus knowledge‐enriched theories. We argue for a composite perspective in which categories are steeped in commonsense theories from a young age but also are informed by low‐level similarity and associative learning cues. Second, we examine the role of language in early categorization. We review evidence to suggest that language is a powerful means of expressing, communicating, shaping, and supporting category knowledge. Finally, we consider categories in context. We discuss sources of variability and flexibility in children's categories, as well as the ways in which children's categories are used within larger knowledge systems (e.g., to form analogies, make inferences, or construct theories). Categorization is a process that is intrinsically tied to nearly all aspects of cognition, and its study provides insight into cognitive development, broadly construed.WIREs Cogn Sci2011 2 95–105 DOI: 10.1002/wcs.96This article is categorized under:Linguistics > Language AcquisitionPsychology > Development and AgingPsychology > Language