Previous research suggests that comprehending ironic utterances is a relatively late-developing skill, emerging around 5-6 years of age. This study investigated whether younger children might show an earlier understanding when ironic utterances are performed in familiar communicative situations, and investigated the relationships among irony comprehension, language, and theory of mind abilities. A group of 100 children aged 3.0-6.5 years was presented with four types of puppet scenarios depicting different communicative interactions: control, joke, contingent irony and background irony stories. Results suggested that (a) even younger children easily understand jokes, and may sometimes understand ironies; (b) children’s comprehension of irony continues to develop across early childhood; and (c) receptive vocabulary scores had simultaneous effects on irony comprehension and ToM performance.