Two major theories on categorization are Prototype Theory and Decategorization Theory. The former claims children’s early dominant categories are basic and subordinate level ones, while the latter states decategorization process interacts with categorization process, cognitive process may be from general to specific and superordinate category is the first to be developed. Two different views correspond to children’s category development: one holds children’s first category is basic-level category (Rosch, et al., 1976; Lakoff, 1987; Jiang, 2000); the other holds superordinate ones develop first in early categorization (Mandler, 2008; Quinn, 2002; Younger & Fearing, 2000). The two controversial views can be attributed to different methods adopted. Studies holding basic-level categories were learned first often selected subjects older than 2 years old, focusing on production; while studies stating superordinate ones developed first focused on category comprehension, subjects were usually only 3 to 18 months old. To test which category level is dominant in comprehension and production separately, the present study conducted case studies of two Mandarin speaking children from 15 to 23 months, as well as controlled experiments of ninety 3 to 5 years old children with picture classification and naming. Data of case studies showed that a vast majority of children’s early words consisted of basic-level ones, occupying 95% of their vocabulary before 20 months. The elaboration of noun hierarchies consisted mainly in the addition of subordinate-level words. Data of controlled experiments indicated that 86.7% children classified superordinate level category correctly, and all children classified basic and subordinate level category correctly, showing that in category comprehension, children as young as 3 years old could classify category levels correctly. As to category production, all children named basic-level categories properly, and over 50% children correctly named subordinate categories, but, only 4% children could do that for superordinate ones. For age difference, only four 5-year-old children named superordinate categories correctly, younger children totally named wrong, but there was no age difference for basic-level category naming. These results reveal that basic-level category is dominant in early category development, followed by subordinate and superordinate category, according with Rosch’s prototype theory. Since 3 years old children can comprehend superordinate level categories easily, decategorization can be regarded as one part of categorization, interacting with categorization process. Both categorization and decategorization activities together contribute to children’s category development.