This study was designed to describe how preschool and kindergarten children made sense of a story by analyzing their responses to plot, theme and characters. This study proposes that childrens character understanding is closely related to their understanding of plot and theme. Ninety four preschool and kindergarten children and sixty four college sophomores participated in reading aloud and responding to activities from the book, The Tunnel by A. Browne (1989). The participants were individually interviewed about how they understood the literary elements. The interview questions were developed with reference to Lehr (1991), Roser, Martinez, Fuhbrken & McDonnold (2007), and Sloan (2003) in order to understand childrens understanding of plot, theme and character. Transcribed responses were coded in traits related to plot, theme and character. The responses of the college students were used to understand the adult point of view on literary meaning making. From the present study, it is evident that young childrens meaning making of literary elements is different from adults. Further, it is different even among young age groups. When a childs age gets to 5, his/her understanding of character becomes more merged with events and plots, which are similar to that of an adult. However young childrens understanding of psychological or internal aspects of character, of which understanding guarantees sense of theme and plot remains to be developed later. From this study, it seems reasonable to suggest that plot and theme becomes comprehensible through deeper understanding of characters.