Children's peer assessments of aggressive and withdrawn behavior are fundamentally related to developmental changes in their understanding of others. This article synthesizes research relevant to the thesis that peer assessments are dependent on children's ability both to recall the previous behavior of their peers and to predict their likely future behavior. Social schema theory, borrowed from adult social psychology, is highly relevant to such recall and prediction. Age differences, affective biases, and gender roles may color children's assessments of their peers' social behavior. Such influences should be taken into account when conceptualizing interventions aimed at enhancing children's peer status, and in measuring the success of these interventions.