This study examined in a cross-cultural context mothers’ discussions of mental states and external behaviors in a story-telling task with their 3-year-old children and the relations of such discussions to children’s emotion situation knowledge (ESK). The participants were 71 European American and 60 Chinese immigrant mother–child pairs in the United States. Mothers and children read a storybook together at home, and children’s ESK was assessed. Results showed that European American mothers made more references to thoughts and emotions during storytelling than did Chinese mothers, who commented more frequently on behaviors. Regardless of culture, mothers’ use of mental states language predicted children’s ESK, whereas their references to behaviors were negatively related to children’s ESK. Finally, mothers’ emphasis on mental states over behaviors partially mediated cultural effects on children’s ESK.