Children's imitation of adults plays a prominent role in human cognitive development. However, few studies have investigated how children represent the complex structure of observed actions which underlies their imitation. We integrate theories of action segmentation, memory, and imitation to investigate whether children's event representation is organized according to veridical serial order or a higher level goal structure. Children were randomly assigned to learn novel event sequences either through interactive hands‐on experience (Study 1) or via storybook (Study 2). Results demonstrate that children's representation of observed actions is organized according to higher level goals, even at the cost of representing the veridical temporal ordering of the sequence. We argue that prioritizing goal structure enhances event memory, and that this mental organization is a key mechanism of social‐cognitive development in real‐world, dynamic environments. It supports cultural learning and imitation in ecologically valid settings when social agents are multitasking and not demonstrating one isolated goal at a time.