Children often learn about the world through direct observation. However, much of children’s knowledge is acquired through the testimony of others. This research investigates how preschoolers weigh these two sources of information when they are in conflict. Children watched as an adult hid a toy in one location. Then the adult told children that the toy was in a different location (i.e. false testimony). When retrieving the toy, 4- and 5-year-olds relied on what they had seen and disregarded the adult’s false testimony. However, most 3-year-olds deferred to the false testimony, despite what they had directly observed. Importantly, with a positive searching experience based on what they saw, or with a single prior experience with an adult as unreliable, 3-year-olds subsequently relied on their first-hand observation and disregarded the adult’s false testimony. Thus, young children may initially be credulous toward others’ false testimony that contradicts their direct observation, but skepticism can develop quickly through experience.