Background. Associations between positive behaviour, emotion understanding and verbal ability have been reported in studies of preschoolers (Cassidy, Werner, Rourke, Zubernis, & Balaraman, 2003), but have yet to be investigated in younger children. Methods. In this study the performance of 36 toddlers (17 boys and 19 girls; mean age = 29 months, SD=3.9 months) on standardized verbal ability assessments and four simple tests of emotion understanding was examined in relation to three measures of positive behaviour: maternal ratings of prosocial behaviour (Strengths and Difficulties Questionnaire; Goodman, 1997), and video-based coding of the toddlers in 20-minutes dyadic play with (i) mothers and (ii) familiar peers. Results. Relations between the three measures of positive behaviour were rather modest, and only significant for the association between maternal ratings and observed positive behaviours with peers. Maternal ratings of prosocial behaviour were significantly correlated with performance on the emotion-understanding tasks, even when age effects were controlled. Together, emotion understanding and verbal ability explained over half the variance in maternal ratings of prosocial behaviour; unique predictive effects were significant for emotion understanding but not verbal ability. Further, emotion understanding mediated the relationship between verbal ability and mothers' ratings of prosocial behaviour. Conclusions. These findings highlight the importance of emotion understanding as a proximal influence on very early prosocial behaviour.