Children between 4 and 5 years of age develop the understanding that the beliefs that they, as well as others, hold about the world can be false. This understanding comprises an important aspect of theory of mind, and is considered a developmental milestone. Recent empirical and theoretical efforts suggest that failure to understand the concept of false belief may relate to a general, lifelong cognitive bias, where privileged knowledge biases one's understanding of one's own or another person's lack of knowledge (hindsight bias). I present data from a series of studies exploring this link. I propose that hindsight bias contributes to, but cannot fully explain the errors that children typically make on false belief tasks. I discuss the relationship between hindsight bias and false belief understanding, and propose a new theory to explain this connection.