The processes behind the transition from consistently failing tests of false belief understanding to consistently passing the tests was investigated by tracking changes in children's mental state understanding. Participants were 42 children (aged 3;1 to 4;3). There were two conditions; an experimental condition in which children were tested on a battery of eight theory of mind tests every four weeks for six phases of testing, and a control condition in which children only completed the battery of tests at the first and last testing phases. The profiles of performance showed that an understanding of false beliefs develops gradually and the development is relatively stable. An examination of the types of explanation children give on tests of false belief understanding showed that initially they rely on reality, then they progress through a period of confusion, where they do not provide an explanation, to a final stage in which they are able to explain behaviour by referring to an individual's false belief. Further analyses examined practice effects, construct validity, and the role of verbal ability on the development of mental state understanding.