This dissertation covers two areas of research that expand our knowledge on children’s advertising literacy (i.e., advertising-related knowledge). The first part addresses the development of children’s advertising literacy into adult-like levels. The second part focuses on the role of advertising literacy in reducing children’s susceptibility to advertising effects. In doing so, this dissertation not only deepens the existing theoretical and empirical insights on children’s advertising literacy, but also contributes substantially to the societal and political debate on children and advertising. When debating the fairness of child-directed advertising, a crucial first step is to obtain an accurate picture of children’s level of advertising literacy and of how this literacy is related to their advertising susceptibility.