Preschoolers are sensitive to differences in individuals’ access to external resources (e.g., tools) in division of labor tasks. However, little is known about whether children consider differences in individuals’ internal resources (e.g., abilities) and whether children can flexibly allocate roles across different goal contexts. Critically, factors that are relevant to role allocation in collaborative contexts may be irrelevant in competitive and prosocial ones. In three preregistered experiments, we found that 4- and 5-year-olds (mean: 54 months; range: 42–66 months; N = 132) used age differences to infer relative ability and appropriately allocate the harder and easier of two tasks in a dyadic cooperative interaction (Experiment 1), and appropriately ignored relative ability in competitive (Experiment 2) and prosocial (Experiment 3) contexts, instead assigning others the harder and easier roles, respectively. Thus, 3-and-a-half- to 5-year-olds evaluate their own abilities relative to others and effectively allocate roles to achieve diverse goals.