Understanding emotion in interpersonal contexts involves appreciating others’ relations with the environment. This ability is related fundamentally to social cognition, including understanding the actions and goals of social partners. However, the significance of infants’ emotion understanding has been largely underemphasized in recent studies on infants’ social‐cognitive development. In this review, we highlight the interconnectedness of emotion understanding and social cognition in socioemotional development. We incorporate a relational view of emotion to bridge empirical and theoretical work on emotional and social‐cognitive development, and to demonstrate the utility of this approach for advancing novel areas of inquiry.