The present study explored developmental differences in preschoolers’ use of reported speech and internal state language in personal narratives. Three-, four-, and five-year-olds attending a laboratory preschool shared 204 stories about ‘a time when you were happy/sad’. Stories were audio-recorded, transcribed, and coded for reported speech (direct, indirect, narrativized) and internal state language (cognitive states, total emotion terms, unique emotion terms). Personal narratives told by five-year-olds included more cognitive states and more narrativized speech than those told by three- and four-year-olds, even when accounting for children’s vocabulary skills, and that reported speech (narrativized, direct) were positively correlated with cognitive state talk. These findings highlight distinct shifts in children’s use of cognitive state talk and reported speech in personal narratives told at age five. Associations between reported speech and internal state language are both informed by and support Vygotsky’s (1978) fundamental claim that psychological processes are socially mediated by language.