Despite receiving scant attention, the evolution of categorization in early childhood is of central importance, not only in clarifying the child's understanding of the world but in terms of refining cognitive organization and augmenting the development of semantic memory. In this review, we outline how categorization develops and is made manifest in early childhood. Due consideration is also given to both theoretical and research perspectives related to the organization, format and use of categories. It is asserted that categories emerge and embed far earlier than had previously been suggested and that this misconception is largely attributable to testing imprecision and therefore propose there is a need for a new, more refined procedure for use with pre-school children.