This report investigates tool learning and its relations to executive functions (EFs) in toddlers. In Study 1 (N = 93), 18‐, 20‐, 22‐, and 24‐month‐old children learned equally well to choose a correct tool from observation, whereas performance based on feedback improved with age. Knowledge transfer showed significant progress after 22 months of age: Older children ignored irrelevant features more easily and adjusted their behavior more flexibly. Study 2 (N = 62) revealed that spontaneous transfer in 22‐ to 24‐month‐olds was related to set‐shifting skills and response inhibition. Flexible adaptation to feedback correlated with working‐memory capacity. These findings suggest that toddlerhood is a highly dynamic phase of tool learning and that EFs are related to transfer performance at this age.