Children around 4, 5, and 7 years old (N = 48) listened to scenarios depicting a child alone or accompanied by another person (mother, father, friend) who encounters an entity that looks like a real or an imaginary fear-inducing creature. Participants predicted and explained each protagonist’s fear intensity and suggested coping strategies. Results showed age-related increases in judgments that different people will experience different intensities of fear in the same situation. With age, children also demonstrated increasing knowledge that people’s minds can both induce and reduce fear, especially in situations involving imaginary creatures. Suggestions of reality affirmation strategies (e.g., reminding oneself of what is real vs. not real) significantly increased with age, whereas positive pretense strategies (e.g., imagining it is a friendly ghost) significantly decreased.