In cooperative activities, all parties have a shared goal but may not have the same set of skills. The current study considers whether preschoolers are sensitive to probable differences in individuals’ competence when allocating roles. We found that 3.5- to 5.5-year-olds use relative competence, as indexed by the age of their intended partner, to determine who should do the harder and easier of two tasks in a cooperative interaction. A second experiment demonstrated that children allocate roles differently in a competitive context. Young children infer differences in others’ ability and can divide labor efficiently to achieve their goals.