Young children’s social competence is regarded as one of the strongest indicators of positive adjustment throughout the lifespan. As part of an effort to unpack its development, a large body of existing research has established relationships between temperamental factors and social competence, as well as between emotion understanding and social competence. However, studies that have examined these constructs have been laden with definitional disagreements and methodological issues, leaving the true magnitude and scope of the relationships difficult to discern. In addition, there has been very little research that has examined relationships between temperament and emotion understanding, although theory and research with clinical samples suggests there are likely links between the two. The current study thus aimed to add to the existing literature by examining temperamental factors, emotion understanding abilities, and social competence in concert. It was hypothesized that emotion understanding would mediate relationships between temperament and social competence. As expected, certain aspects of temperamental reactivity and self-regulation, as rated by both parents and teachers, correlated with preschoolers’ and kindergarteners’ performance on emotion understanding tasks, which required them to identify emotions likely to be elicited by common social situations (emotion situation knowledge) and to offer explanations for why certain situations may be elicited by those social situations (emotion situation reasoning). Interestingly, performance on emotion situation reasoning tasks, but not emotion situation knowledge tasks, emerged as a significant mediator between temperament and social competence, regardless of temperament informant. Although further research is needed in this area, emerging patterns suggest a need to distinguish between children’s possession of rote knowledge of emotions and abilities to reason about them. Limitations of the study and implications for future research are also discussed.