How do words affect generalization, and how do these effects change during development? One theory posits that even early in development, linguistic labels function as category markers and thus are different from the features of the stimuli they represent. Another theory holds that early in development, labels are akin to other features, but that they may become category markers in the course of development. We addressed this issue in two experiments with 4-to 5-year-olds and adults. In both experiments, participants performed a categorization task (in which they predicted a category label) and an induction task (in which they predicted a missing feature). In the latter task, the category label was pitted against a highly salient feature, such that reliance on the label and reliance on the salient feature would result in different patterns of responses. Results indicated that children relied on the salient feature when performing induction, whereas many adults relied on the category label. These results suggest that early in development, labels are no more than features, but that they may become category markers in the course of development.