This is a follow-up to an earlier article (Levy, 2008) on the microgenesis of narrative pre-construction (Labov, 2006) in elicited third-person retellings. As in the earlier study the focus is on the formation of anticipatory goal statements, summaries of characters' motivations for their actions, feelings and beliefs. The present study examines how narrators construct inferences about characters' mental states, comparing onto- and mesodevelopment in seven- and twelve-year olds' repeated retellings of stories; especially the use of their own earlier speech to link descriptions of non-observable mental events to descriptions of observed activities. The data suggest the development of two discourse processes across both spans of time, one an expansion of discourse and the other a shrinking of it. The findings support the proposal that, in microgenesis, the ability to interpret events in advance of speaking results from the automatization of discourse activities learned during the long course of ontogenetic development (Werner and Kaplan, 1963; McNeill, 2005). This article presents an approach to studying the pre-construction of generalized interpretations of events, and in this sense to studying how discourse can serve a constitutive function.