This study investigated relations among children's Theory‐of‐Mind (ToM) development, early sibling interactions, and parental discipline strategies during the transition to siblinghood. Using a sample of firstborn children and their parents (N = 208), we assessed children's ToM before the birth of a sibling and 12 months after the birth, and sibling interactions (i.e., positive engagement and antagonism) and parental discipline strategies (i.e., child‐centred and parent‐centred discipline) at 4 and 8 months in the first year of siblinghood. Structural equation modelling analyses revealed that children's ToM before the birth of the sibling predicted children's positive engagement with the infant sibling, whereas children's antagonistic behaviours towards the infant sibling negatively predicted children's ToM at 12 months, but only when mothers used low levels of child‐centred discipline. These findings emphasize the role of parents in the development of young children's social‐cognitive understanding in the context of early sibling interactions. Highlights This study investigated relations among firstborns' Theory‐of‐Mind (ToM), early sibling relationships, and parental discipline during the first year of siblinghood. Multigroup analyses showed that ToM predicted higher sibling positive engagement, and early sibling antagonism predicted poorer ToM when mothers used low child‐centred discipline. Parental discipline plays an important role in the development of young children's social understanding and sibling relationships as early as the first year of siblinghood.