Pretend play in early childhood arises in the context of social interaction and, as such, constitutes a form of discourse indigenous to the child's world. The present study is a first detailed investigation of thematic-ideational structure in young children's dyadic pretend play with special emphasis on major generative strategies involved in the realization of coherent play action sequences. Play was conceptualized as a story in a dramatic mode where two actors jointly generate or attempt to generate ideationally coherent action sequences or play plots resulting in a complex, ever-evolving thematic structure at a number of levels of analysis. Methodological problems of analysis resulted in the creation of an analytic procedure — Master Text — that simultaneously addresses structural and processual features of play and is able to deal with lengthy play segments. The results characterize playing as a form of discourse which proceeds according to patterned regularities at the level of Thematic Core Structures and associated schemata which underly the plot surface. The realization of such structurizations comes about during the play process in a complex interplay with features of the setting and requires establishing and modifying a shared knowledge base. These findings are discussed in light of their significance for childhood socialization.