This study investigated correlations between understanding of hidden emotion and theory of mind. Five- and six-year-old children (N = 105, 48 boys and 57 girls) took hidden emotion tasks (TEC component 7), first- and second-order false belief tasks, and a vocabulary test. Teachers rated the children’s social interactions in terms of peer relationships. Individual differences in children’s understanding of first- and second-order false belief and understanding of hidden negative emotion were associated with differences in language ability. Individual differences in understanding of first-order false belief and understanding of hidden negative emotion were correlated, and this association remained after controlling age and language ability. The results also showed that children who were more advanced in understanding of first-order false belief are more likely to have fewer peer problems. These findings were discussed in terms of social and cognitive development.