There are two fundamentally different ways to attribute intentional mental states to others upon observing their actions. Actions can be interpreted as goal–directed, which warrants ascribing intentions, desires and beliefs appropriate to the observed actions, to the agents. Recent studies suggest that young infants also tend to interpret certain actions in terms of goals, and their reasoning about these actions is based on a sophisticated teleological representation. Several theorists proposed that infants rely on motion cues, such as self–initiated movement, in selecting goal–directed agents. Our experiments revealed that, although infants are more likely to attribute goals to self–propelled than to non–self–propelled agents, they do not need direct evidence about the source of motion for interpreting actions in teleological terms. The second mode of action–based mental state attribution interprets actions as referential, and allows ascription of attentional states, referential intents, communicative messages, etc., to the agents. Young infants also display evidence of interpreting actions in referential terms (for example, when following others' gaze or pointing gesture) and are very sensitive to the communicative situations in which these actions occur. For example, young infants prefer faces with eye–contact and objects that react to them contingently, and these are the very situations that later elicit gaze following. Whether or not these early abilities amount to a ‘theory of mind’ is a matter of debate among infant researchers. Nevertheless, they represent skills that are vital for understanding social agents and engaging in social interactions.