There is considerable interest in the role of mental state language in theory of mind development. This study examines cognitive and desire state discourse of 43 mothers during play interactions with their two-year-old children and theory of mind as indicated by a battery of false belief tasks around the age of five. Desire state comments of mothers during free play which were appropriate to the conversational context were significantly related to children's later theory of mind, and this relation was independent of other confounding variables, including a home-based measure of maternal sensitivity, and socio-economic status, and an estimate of child language. The child's desire state language was concurrently related to the mother's desire state language used appropriately, and the child's cognitive state language was related to the mother's appropriate cognitive state language. Although cognitive state language was not predictive of later theory of mind, this may be because this kind of language plays a later role in theory of mind development.