As shown by children's failure to make the say-mean distinction in referential communication, young children often confuse utterance information and referential knowledge gained from non-utterance sources. Five experiments examined the extent and nature of the referential source errors of 5- to 10-year old children. Children listened to short stories containing a referential utterance that was informative about the intended referent in a display, informative only in combination with information in the story context, or ambiguous. After each story, the children independently evaluated the sufficiency of the story information to identify the referent and whether the final utterance alone was the source of sufficient information. Children's confusion of sources of information internal to a story was determined by examining source errors for the contextually informative utterances. In addition, Experiment 1 examined children's confusion of story information and external referent information provided by the experimenter. The other experiments examined the roles of source similarity and memory access to verbatim information in referential reasoning and source memory. The results showed considerable source confusion by the younger children, which seemed attributable in part to memory variables. Developmental differences in source confusion may reflect the greater independence of reasoning and memory of older children. (C) 1994 Academic Press, Inc.