After learning to categorize a set of alien-like stimuli in the context of a story, a group of 5-year-old children and adults judged pairs of stimuli from different categories to be less similar than did groups not learning the category distinction. In a same-different task, the learning group made more errors on pairs of non-identical stimuli from the same category than did the other groups, suggesting increased within-category item similarity, or compression. These expansion and compression effects add further support to the view that concept formation involves systematic changes in the metric of similarity space within which objects are represented. They also suggest that these processes do not vary with age, which is at least consistent with the hypothesis that they are fundamental to the mechanisms underlying concept formation.