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Abstract. Young readers often seem to overlook explicitly stated causal statements in narrative texts and instead give their own versions of why a text event occurred. Some researchers would agree with Smith (1979) that children do this because they read for meaning rather than word-by-word. This is an "inside-out" (or, "schema-based") view of text comprehension. Other researchers, however, agree with Thorndike (1917) that "errors" occur because "the mind is assailed by every word in the paragraph." This is an "outside-in" (or, "text-based") view of the comprehension process. The purpose of this study was to find out the relative influence of text data and prior knowledge on the kinds of inferences which children make when answering questions about stories. In Experiment 1, text structure was altered by embedding either predictable or unpredictable reasons for events in the text, and also by varying the position and distance of these reasons from the text event being asked about. Some of these stories were familiar; others less so. Text accessibility was also varied. In all, the design was a 2 4 × 3 factorial, using repeated measures. In Experiment 2, a causal "preference" factor was added, to take account of the fact that children seemed predisposed toward certain kinds of inferences, whether they are predictable or not. The results provide support for the notion that text data and background knowledge compete for priority in question-answering. They suggest that children may benefit from instruction which helps them to arbitrate between plausible, yet competing explanations for important text events.Children often seem to overlook explicitly stated causal statements in narrative stories and instead make their own inferences about why certain text events occur.Special thanks are due to the children, principals and staff of Richmond Park, Glenview, Hillcrest, Hamilton East and Woodstock schools for helping us with this study. We are also grateful to the principal of Fruitvale School, and to the children there who allowed us to talk to them at length about our questions and their answers. The comments of Journal of Reading Behavior reviewers were also of considerable assistance to us in revising this article.