Verbal interaction with others has been identified as an important forum for children’s developing understanding of the thoughts and feelings of others – their theory of mind. However, conversational interactions in settings and relationships important to young children beyond the home and family have received little attention in research literature. This qualitative study analyses conversation between preschool children and early childhood teachers as they engage in group-shared storybook reading. Findings show shared storybook reading in the preschool setting to be a rich source of conversation involving reference to mental states, in particular, affect, desire and cognitive states. In addition, teachers’ use of causal questioning may provide a salient forum for children to exercise and enhance their theory of mind abilities.