People's emotional experiences depend not only on what actually happened, but also on what they thought would happen. However, these expectations about future outcomes are not always communicated explicitly. Thus, the ability to infer others' expectations in context and understand how these expectations influence others' emotions is an important aspect of our social intelligence. Prior work suggests that an abstract understanding of how expectations modulate emotional responses may not emerge until 7 to 8 years of age. Using a novel paradigm that capitalizes on intuitive physics to generate contextually plausible expectations, we present evidence for expectation-based emotion inference in preschool-aged children. Given two bowlers who experienced identical final outcomes (hitting 3 of 6 pins), we varied the trajectory of their balls such that one would initially expect to hit all pins (high-expectation), while the other would expect to hit none (low-expectation). In Experiment 1, both 4- and 5-year-olds appropriately adjusted characters' happiness ratings upward (low-expectation) or downward (high-expectation) relative to their initial emotions; however, only 5-year-olds made adjustments robust enough to manifest as higher final ratings for the low-expectation than the high-expectation character. In Experiments 2-3, we replicate these results and show that 5-year-olds reliably differentiate the characters' emotions even when their expectations must be inferred from context. An internal meta-analysis revealed a robust and consistent effect across the three experiments. Together, these findings provide the earliest evidence for expectation-based emotion reasoning and suggest that the ability to spontaneously generate and consider others' expectations continues to develop during preschool years.