--- - |2 Abstract Using data from a study of 140 preschool children (39% female), we examined the relations between direct assessments of emotion knowledge and naturalistic observations of behavior during free‐play periods, and tested parent‐ and teacher‐reported effortful control as a moderator of these relations. Basic emotion recognition was unrelated to social play and reticent behavior, whereas situational understanding of emotions (thought to be a relatively sophisticated aspect of emotion knowledge) was negatively related to reticent/uninvolved behavior and marginally positively related to social play. Effortful control significantly moderated these relations, such that situational emotion understanding was more strongly related to reticent/uninvolved behavior and social play at low levels of effortful control, and unrelated to outcomes at high levels of effortful control. These results highlight the unique role of situational understanding in predicting children’s social competence and suggest that emotion knowledge is particularly important for children who struggle with effortful regulation skills. - Social Development, EarlyView.