People often view certain ways of classifying people (e.g., by gender, race, or ethnicity) as reflecting real distinctions found in nature. Such categories are viewed as marking meaningful, fundamental, and informative differences between distinct kinds of people. This article examines the development of these essentialist intuitive theories of how the social world is structured, along with the developmental consequences of these beliefs. We first examine the processes that give rise to social essentialism, arguing that essentialism emerges as children actively attempt to make sense of their environment by relying on several basic representational and explanatory biases. These developmental processes give rise to the widespread emergence of social essentialist views in early childhood but allow for vast variability across development and cultural contexts in the precise nature of these beliefs. We then examine what is known and still to be discovered about the implications of essentialism for stereotyping intergroup interaction, and the development of social prejudice. We conclude with directions for future research, particularly on the theoretical payoff that could be gained by including more diverse samples of children in future developmental investigations.