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Following on from research that indicated significant moral internalisations by age 3, using a play narrative approach in which children were asked to complete story stems describing a range of moral dilemmas, the purpose of this study was to replicate the results, extend them with longitudinal information and assess the child’s developing capacities to acknowledge both sides of moral dilemmas and resolve them in a prosocial way. Fifty-one children were presented with three enacted story stems describing moral dilemmas as they might occur in everyday life. Story completions were obtained from children at ages 3, 4, and 5 and were coded for the level of acknowledgement of the dilemmas and the degree of prosocialness involved in story resolution. Results included the following: firstly, some children acknowledged the dilemmas and resolved them prosocially as early as age 3; secondly, the ability to acknowledge dilemmas and resolve them improved with age; and thirdly, children showed a greater capacity to acknowledge dilemmas with support from an examiner. The implications of these findings for our understanding early moral development are discussed, along with questions pointing to new research.