Humor is a central feature of close and intimate relationships in childhood. However, fundamental questions regarding the relationship between humor production, pretend play, and social understanding have been overlooked. In a selected subsample from a prospective longitudinal study of first-born children (N = 110, M age = 6.91 years, 46.4% female, 98.1% parents identified as English, Welsh, Scottish, or Irish), we conducted detailed observational coding of children's humor production during dress-up play with younger siblings. Focal children also completed a battery of social understanding tasks that measured emotion understanding and second-order belief understanding. Focal children were also observed during solo free play with Playmobil, and their spontaneous references to others' cognitions and play with objects were coded. Correlation analyses indicated that children's word play with their sibling was associated with their tendency to engage in pretense during solo play. Regression analyses showed that humorous sound play with siblings was associated with their emotion understanding and playful teasing with siblings was associated with their spontaneous references to others' cognitive states during solo free play. Our findings contribute to knowledge and theory regarding domains of development associated with humor production in childhood.