We told ninety-nine 4- and 5-year-olds stories in which speakers told lies and truths in two contexts: those told to deny a transgression (misdeeds) and those told to spare another's feelings (politeness). Participants identified each statement as a lie or as the truth, morally judged it as good or bad, and decided whether or not to assign punishment to the speaker. All children received measures of first- and second-order false-belief understanding. Although 4-year-olds were above chance in their identification accuracy, they did not differentiate between lies and truths in their moral judgments or punishments. Five-year-olds outperformed 4-year-olds in their identification accuracy, morally judged lies more negatively than truths, and assigned speakers of lies more punishment than those who told truths. Five-year-olds also treated lies about misdeeds more negatively than politeness lies in their moral judgments and punishments. Children's identification of both lies and truths related to their first-order false-belief understanding, while their moral judgments and punishment of lies related to their second-order false-belief understanding. These findings suggest that different considerations are made when children reason about the conceptual and moral differences between lies and truths.