Two experiments investigated 4- to 5-year olds' understanding of semantic relations and methods for incorporating new words into their lexicon. In one experiment, 24 children were shown a picture of a container and told that an object called "X" was hidden inside it. Children were asked questions about the object X and about "Y," which indicated a word that might form an inclusive, overlapping, or mutually exclusive relation with X. An example of an inclusive relation is that between goldfish and fish. An overlapping relation would be that between car and blue, while fork-spoon would constitute a mutually exclusive relation. Children were asked one of two questions: (1) Do you think the hidden object has to be a Y? and (2) Do you think the object could be a Y? Children answered above chance levels with the "could" question. In a second experiment, 24 children played with two balls in two toy dogs. During the play session, the experimenter called one of the dogs a "tiv"; the other dog and the two toys were called "this." In the postest, children were asked "has to" and "could" questions concerning the "tiv." Results indicated that children considered the concept represented by the novel name to be a subset of the concept represented by the familiar name. They formed either a subtype or proper name interpretation. (BC)