Children's sensitivity to context when making inferences about ability was investigated. In three studies, elementary school children (ages 5 to 10, total N = 332) were asked to reason about the relation between academic ability and the speed with which characters completed puzzle tasks. Participants were primed to interpret the characters' task completion rates with reference to either (1) the character's perceptions of the difficulty of the task, or (2) the character's level of effort on the task. Children who were primed to consider the perceived difficulty of the task were more likely to view ability as a static quality, a pattern of reasoning that included a tendency to associate task completion rates with ability, and to agree that not all individuals are capable of achieving high levels of success. These results provide evidence that even early elementary school children are sensitive to subtle contextual cues when making inferences about ability, and are consistent with the possibility that children make use of implicit cues available to them in their social environment to derive meaning from achievement situations.