A study examined how children's understanding and use of written language and graphic/constructive art are embedded in the social world of their classrooms and how they explore the potential of communication systems (specifically, what socio-psychological strategies they use). Subjects were 21 3- and 4-year-old children of faculty and staff at a large midwestern university, all in a classroom with a curriculum particularly supportive of young children's literacy learning. The children's self-selected literacy activities were videotaped, and the tapes indicated that social interaction was an important part of most events. As they talked with their peers and teachers, the children often adopted author and audience roles. The authors came to recognize each other as sources of inspiration and aid for their writing. Sometimes a child would co-author a text with either a teacher or a more experienced classmate, with the first author initiating and the assistant offering ideas from an area of personal expertise. Children and teachers constructed and used a great deal of shared knowledge about literacy. Extensive observation and analysis indicated that conversation played a crucial role in constructing literacy concepts. This systematic relationship between conversation and demonstration allowed children to learn about literacy, while writing their own texts inspired them to develop personal perspectives. (AEW)