Does making an inference lead to better learning than being instructed directly? Two experiments evaluated preschoolers' ability to learn new words, comparing their memory for words learned via inference or instruction. On Inference trials, one familiar and one novel object was presented and children were asked to "Point at the [object name (i.e., pizer)]." These trials required the child to infer that the novel label referred to the novel object and not to the familiar object. On Instruction trials, a novel object label directly referred to a novel object (e.g., "This is a glark") and no familiar distracter object was shown. We found that although children looked longer at the novel target on Instruction trials, they showed poorer retention of the newly learned label compared to words learned on Inference trials. Hence, we found that inferential learning was superior to instruction. Relevance for optimal learning contexts and education are discussed. (Contains 4 figures.)