Developing the ability to accurately infer others’ emotions is crucial for children’s cognitive development. Here, we offer a new theoretical perspective on how children develop this ability. We first review recent work showing that with age, children increasingly use probability to infer emotions. We discuss how these findings do not fit with prominent accounts of how children understand emotions, namely the script account and the theory of mind account. We then outline a theory of how probability allows children to infer others’ emotions. Specifically, we suggest that probability provides children with information about how much weight to put on alternative outcomes, allowing them to infer emotions by comparing outcomes to counterfactual alternatives.