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Effective communication requires knowing the “right” amount of information to provide; what is necessary for a naïve learner to arrive at a target hypothesis may be superfluous and inefficient for a knowledgeable learner. The current study examines 4- to 7-year-olds’ developing sensitivity to overinformative communication and their ability to decide how much information is appropriate depending on the learner’s prior knowledge. In Experiment 1 (N = 184, age = 4.09–7.98 years), 5- to 7-year-old children preferred teachers who gave costly, exhaustive demonstrations when learners were naïve, but preferred teachers who gave efficient, selective demonstrations when learners were already knowledgeable given their prior experience (i.e., common ground). However, 4-year-olds did not show a clear preference. In Experiment 2 (N = 80, age = 4.05–6.99 years), we asked whether children flexibly modulated their own teaching based on learners’ knowledge. Five and 6-year-olds, but not 4-year-olds, were more likely to provide exhaustive demonstrations to naïve learners than to knowledgeable learners. These results suggest that by 5 years of age, children are sensitive to overinformativeness and understand the trade-off between informativeness and efficiency; they reason about what others know based on the presence or absence of common ground and flexibly decide how much information is appropriate both as learners and as teachers.