This article argues that Vygotsky's analysis of children's play and of the ways it can serve as a powerful matrix for learning and development has two important implications that are not always fully appreciated. First, children's social pretend play can promote development both in the domains of cognition and language and in dimensions of social competence, such as self-regulation and cooperation. Second, tapping play's value in the education of young children is not purely a matter of alternating didactic/academic instruction with unstructured free-play periods. We also need to devise educational practices that systematically integrate the play element into the curriculum in carefully structured ways that simultaneously engage children's enthusiasm and provide scope for their own initiative and creativity. One concrete example of a play-based activity that can do this successfully is the storytelling/story-acting practice developed by Vivian Paley. Drawing on a recently completed 2-year study of this practice in several preschool classrooms serving low-income 3- to 5-year-olds from diverse ethnic backgrounds, we focus on an individual case study to illustrate how participation in this practice can generate mutually reinforcing benefits in language and social competence for the children involved. In the process, we consider the significance of both peer-group relations and socio-emotional relations with adults and their complementary roles in helping promote these competencies.