The author draws on his own extensive research in urban classrooms to present a comprehensive, grounded theoretical model of children’s understanding of picture storybooks―the first to focus specifically on young children. Advancing a much broader and deeper theory of literary understanding, the author suggests that children respond in five different ways during picture storybook readalouds; that these responses reveal that children are engaged in different types of literary meaning-making; and that these types of meaning-making are examples of five foundational aspects of literary understanding. Capturing the liveliness of children’s responses, this dynamic volume: Describes picture storybooks as sophisticated aesthetic objects worthy of children’s literary critical abilities. Offers a theory of literary understanding that is relevant to contemporary young children from a wide variety of ethnic, racial, and socioeconomic backgrounds. Includes a wealth of examples of children’s responses to literature and how teachers scaffold their interpretation of stories. Examines the significance of young children’s literary interpretation, factors that influence literary understanding, and implications for practice and further research.