Mediate causal transmissions are those in which the transmission between an initial cause and an eventual effect is mediated by a third event. The concept of causal mediation is seen as analogous to that involving use of a middle term in non-causal transitive inference problems. Contrary to some previous research, both three- and five-year-olds understood mediate causal transmission as portrayed in simple, three-term causal chains. Children of both ages chose to activate a cause which could produce an effective causal mediator over an alternative cause which could produce an ineffective causal mediator. The five-year-olds in addition correctly identified the impossibility of producing the effect without an appropriate causal mediator and often mentioned the causal mediator explicitly in verbal justifications of their responses. Relations between the present experiment and previous literature on causal reasoning and transitive inference are discussed.