3 experiments were performed to assess children's ability to solve a problem by analogy to a superficially dissimilar situation. Preschoolers and fifth and sixth graders were asked to solve a problem that allowed multiple solutions. Some subjects were first read a story that included an analogous problem and its solution. When the mapping between the relations involved in the corresponding solutions was relatively simple, and the corresponding instruments were perceptually and functionally similar, even preschoolers were able to use the analogy to derive a solution to the transfer problem (Experiment 1). Furthermore, salient similarity of the instruments was neither sufficient (Experiment 2) nor necessary (Experiment 3) for success by preschool subjects. When the story analog mapped well onto the transfer problem, 4-year-olds were often able to generate a solution that required transformation of an object with little perceptual or semantic similarity to the instrument used in the base analog (Experiment 3). The older children used analogies in a manner qualitatively similar to that observed in comparable studies with adults (Experiment 1), whereas the younger children exhibited different limitations.