The study investigates the hypothesis that children's ability to attribute second-order beliefs facilitates their understanding of evidence, as seen in the ability to distinguish between causes and reasons. Seventy-four children 5-7 yr old were given belief and evidence tests. The belief tests assessed their ability to represent and reason from second-order false-beliefs, and the evidence tests assessed their ability to distinguish between the cause of a situation and a person's reason for believing it. The relation between performance on the two tests was determined, taking into account general language and non-verbal reasoning abilities. Results show that performance on the belief test and on the evidence part of the evidence test improved significantly over the age range, and that a significant proportion of variance in the evidence test scores is accounted for by second-order false-belief understanding, over and above that accounted for by general language and non-verbal abilities. The argument is made that second-order false-belief understanding is fundamental to children's epistemological development, underlying not just their understanding of evidence, but also their understanding of inference and truth.