A study examined how global coherence in story comprehension develops in children through causal inference. Stories of contrasting structure were analyzed by a causal network model. Evidence of parallels between the construction of coherent representations and the development of the story understanding is presented. Data show that children understand the role of goals in motivating actions locally within an episode by the age of 5, and integration within episodes is well established by age 8. However, from 8 to 11 years, changes in the understanding of how states and actions are related across episodes become more marked. By age 14, story structures become more important. This finding indicates that development of story understanding follows a sequence in which integration via inferences of information within episodes precedes that between episodes, and that both forms of integration change with development. The causal network model builds story structure in a parallel fashion. Together, these findings suggest that global coherence in story representation follows from local understanding of relations between states and actions. A list of 21 references is included. (Author/MSE)