Our goal was to explore how children's understanding of gender as a social category relates to their acquisition of sex-typed knowledge and preferences. Children's gender concepts, sex-typed preferences, and stereotyped knowledge were measured in 61 boys and girls (3-5 years). Gender concept measures included ability to identify and to discriminate the sexes, understanding gender group membership, temporal stability of gender, and gender consistency over situational changes. Children improved with age on most of the measures except gender consistency. With the exception of consistency, measures of gender concept understanding were found to be related to children's stereotyped toy and clothing knowledge and/or to their sex-typed toy preferences (with age controlled). It was shown that only rudimentary gender understanding is needed prior to children learning about sex stereotypes and prior to showing strong sex-typed preferences for peers or toys. The roles of gender identity, stability, consistency, and group membership in the sex-typing process are discussed.