In sentences with internal negation, Free Choice Inferences (FCIs) are canceled (Chierchia, 2013). The present study investigated the possibility that FCIs are negated, not canceled, by external negation. In previous research, both Mandarin-speaking children and adults were found to license FCIs in affirmative sentences with a modal verb and the disjunction word huozhe ‘or’ (Zhou et al., 2013). The present study contrasted internal versus external negation in sentences that contained all the ingredients needed to license FCIs. Four experiments were conducted using the Truth Value Judgment Task (Crain and Thornton, 1998). Experiment 1 tested Mandarin-speaking children and adults using sentences with internal negation, a modal verb and disjunction. As expected, children did not license FCIs; rather, they assigned a ‘neither’ interpretation to disjunction. Also as expected, adults analyzed disjunction as taking scope over internal negation, yielding a ‘not both’ interpretation (Jing et al., 2005). Experiment 1 provided the benchmarks for sentences with external negation in Experiments 2-4. Experiment 2 confirmed that English-speaking adults distinguish between internal and external negation in sentences with disjunction. In Experiment 3, external negation was conveyed by the focus adverb zhiyou ‘only’. External negation eliminated the between-group differences observed in Experiment 1. Both children and adults analyzed external negation as taking scope over disjunction. Experiment 4 tested the effect of external negation on the computation of FCIs. The test sentences only differed from Experiment 1 by using external negation, rather than internal negation. Again, children and adults interpreted the test sentences in the same way. Most importantly, in contrast to Experiment 1 (with internal negation), both groups analyzed external negation as negating, rather than canceling, FCIs. The findings support the distinction between internal and external negation.