AbstractTwo experiments examined first, third, and fifth graders, (seventh graders in Experiment 2), and adults' ratings of an actor's mood, instrumental, social, and a variety of simple and complex psychological goals as explanations of an actor's positive or negative behaviour toward a recipient in the absence (Experiment 1) or presence of bystanders (Experiment 2). In Experiment 1, for positive stories, third graders to adults rated psychological as more likely than instrumental goals; for negative stories, all age groups rated instrumental goals as most likely. In Experiment 2, for positive stories, first graders to adults favoured direct psychological goals (recipient's emotion); for negative stories, third graders to adults favoured indirect psychological goals (bystander's thought about actor or actor's emotional state). By early elementary school, children differentiate among specific goals when explaining actions. Older children and adults recognize that behaviour may be motivated by indirect as well as direct goals.Highlights Do children recognize the plausibility of goal explanations, particularly psychological‐goal explanations, when explaining interpersonal actions? In Experiment 1, using a rating‐scale approach, even third graders preferred psychological and social goals as explanations for positive interpersonal behaviour but all ages preferred instrumental‐goal explanations for negative interpersonal actions. In Experiment 2, all age groups recognized the plausibility of direct psychological‐goal explanations, but only seventh graders and adults also recognized indirect‐psychological‐goal explanations. Even early elementary school children recognize the plausibility of explanations involving psychological goals but only older children and adults recognize higher‐order mental‐state explanations that span multiple people or roles.