This research was an examination of how children's encoding focus at the time of an event affects later source monitoring decisions. Four- and 6-year-old children watched a video of two speakers making various statements. The children were directed to either focus on how they felt about what was being said (Emotional-self focus), how the speakers felt about what they were saying (Emotional-other focus), perceptual features about themselves (Perceptual-self focus), perceptual features about the speakers (Perceptual-other focus), or given no particular encoding directions (No-focus control). The results suggested that emotional processing during an event is more influential on source monitoring decisions than perceptual processing. Furthermore, the results indicate the mechanisms by which emotional processing affects later source judgments varies as a function of the direction of the focus (i.e., inward or outward). We also examined how changes in binding processes correspond to developments in source monitoring. Six-year-olds' binding performance and source monitoring scores were positively related.