Do young children treat labels as features or as category markers? The current study addressed this question by examining the effect of labels on young children's classification and induction. The first experiment replicated previous study on adults demonstrating that adults treat labels as category markers. The other two experiments applied the same paradigm to young children. Children were trained by classification in Experiment 2A and by induction in Experiment 2B, whereas both experiments used the classification and induction tasks that were identical to those in Experiment 1. The results from the three experiments indicated that adults treated labels as category markers, whereas no such evidence was found for young children.