The present study explored children’s ability to utilize synonymous labels during relational reasoning. In Experiment 1, 4- to 5-year-old children and adults were presented with a base pair of related words (e.g., Castle:Rock) and then were given a partially completed target word-pair (Castle:?) that they could complete with a label that made the target word-pair relationally identical to the base word-pair (e.g., Stone). Additional response options included a label thematically related to the first word in the target pair (e.g., King) or an unrelated word (e.g., Milk). Results indicated that adults and 5-year-olds successfully completed the task, whereas 4-year-olds exhibited difficulty. In Experiment 2, 4-year-old children were presented with the same task, however relations were conveyed by identical rather than synonymous labels. Under these conditions, 4-year-old children exhibited no difficulty in either lure condition. These findings are discussed with regards to the theories of learning early in development.