This study examined children's understanding of irony when a difference existed between a speaker's intended meaning and a listener's interpretation of the meaning. Three irony contexts were presented to 87 7/8-year-olds (second graders), 90 11/12-year-olds (sixth graders), and 103 adults. In the normal irony context, the speaker intended to convey irony, and the listener felt that he/she was being criticized by the speaker. In the unintended irony context, the speaker intended to convey praise, but the listener felt that he/she was being criticized by the speaker. In the unsuccessful irony context, the speaker intended to convey irony, but the listener felt that he/she was being praised by the speaker. The results showed that 11/12-year-olds and adults understood all three types of irony and appropriately judged whether or not the speaker's intention was ironic and whether or not the listener thought that he/she was being criticized by the speaker. However, 7/8-year-olds did not understand the context differences, and across all types of irony they consistently judged that the speaker intended to praise the listener and that the listener thought that he/she was being praised. Furthermore, performance was generally correlated with passing second-order false belief tasks, especially with unintended and unsuccessful irony.