The main purpose of this study was to explore the development of knowledge about the appearance-reality distinction and the perspective-taking ability and to examine its relation. The subjects were 104 children. 13boys and 13girls each at the age of 3, 4, 5. and 6. The performance of four age groups were compared on illusion appearance-reality, color appearance-reality, perceptual perspective-taking, and cognitive perspective-taking tasks. The data were collected by individual testing and analyzed by the two-way ANOVA with repeated measures, one-way ANOVA and Pearson Correlation Coefficients. The major results were as follows. 1. In children`s understanding of the appearance-reality distinction, significant differences were found between 3-year-olds and 4-year-olds. and 5-year-olds and 6-year-olds. While between 4-year-olds and 5-year-olds showed no such differences. Besides, gender did not affect the children`s understanding of the appearance-reality distinction. 2. There was significant difference in performance according to the type of tasks. That is 3-year-olds perform better illusion appearance-reality distintion than color appearance-reality distintion, while 4, 5, 6 year old children`s performance of color appearance-reality and illusion appearance-reality distinction showed no difference. 3. In children`s ability of perceptual perspective-taking, significant difference was found between 3, 4, 5-year-olds and 6-year-old children. And in ability of cognitive and perspective-taking, significant difference was found between 3, 4-year-olds and 6-year-old children. Besides, gender did not affect the children`s perceptual and cognitive perspective-taking. 4. The color appearance-reality distinction and perceptual perspective-taking showed significant correlation. That is, the children of high grade for perceptual perspective-taking were better understanding of color appearance-reality distinction.