Past work have examined children's understanding of race, including their categorization of others based on race, racial preferences, and racial attitudes. Almost all of these studies have only investigated children's racial understanding based on Black and White individuals. In the current study, we wanted to examine whether 4- and 5-year-old White children categorize and hold preferences on the basis of race comparing Asian, Black, and White individuals. Participants were asked "Who do you like the best?" to determine whether they held preferences for individuals based on race, between paired pictures of different-race children. To assess categorization, participants were asked to match pictures of children to exemplars they thought looked most like the children in the pictures. Results demonstrate that children categorize based on race significantly greater than chance t(47) = 5.569, p < 0.001. In terms of preferences, children significantly preferred White over Black children, t(47)=2.801, p=0.007. However, they did not have a preference for Asian versus White children, t(47)=1.219, p=0.229 or Asian versus Black children, t(47)=1.070, p=0.290. Taken together, these results suggest White children have a fairly sophisticated understanding of race; not only do they differentiate between members of their in-group and out-group (significantly differentiating on race between White/Black and White/Asian comparisons), but they also differentiate between other racial groups (significantly differentiating between Asian and Black individuals). Although children categorize and recognize race, this does not mean they always form preferences based on race.