This study investigates the development of two cognitive abilities that are involved in metaphor comprehension: implicit analogical reasoning and assigning an unconventional label to a familiar entity (as in Romeo’s ‘Juliet is the sun’). We presented 3- and 4-year-old children with literal object-requests in a pretense setting (e.g., ‘Give me the train with the hat’). Both age-groups succeeded in a baseline condition that used building blocks as props (e.g., placed either on the front or the rear of a train engine) and only required spatial analogical reasoning to interpret the referential expression. Both age-groups performed significantly worse in the critical condition, which used familiar objects as props (e.g., small dogs as pretend hats) and required both implicit analogical reasoning and assigning second labels. Only the 4-year olds succeeded in this condition. These results offer a new perspective on young children’s difficulties with metaphor comprehension in the preschool years.