Our folk psychology includes the ability to reason about freedom of choice. That is, we believe that an agent who has performed an action could have done otherwise. This study investigates the development of the concept of freedom of choice in preschool children. Importantly, we contrast choices with desires, outcomes and constraints on action. In Experiment 1, four- and five-year-olds were shown a character that first desired and then achieved a given outcome, and were asked whether the character could have chosen to do otherwise. In Experiment 2, children acted themselves then were asked to reason about whether they could have done otherwise. We found that preschoolers appropriately reasoned about their own and others freedom of choice. Moreover, they appropriately reasoned about lack of choice when actions were physically impossible (Experiment 1) or externally constrained (Experiment 2). These findings have implications for the development of social cognition and moral reasoning.