Adults’ use of developmentally appropriate dialogic reading practices during shared book-reading can motivate children to build upon their existing knowledge and lived experiences to make sense of the mental states (i.e., emotions, cognitions, beliefs, and intentions) and behaviors of story characters. The ways adults narrate and engage during shared book-reading—shaped by sociodemographic, ecological factors, and biological risk—can significantly influence how children interpret and learn from these interactions. In this chapter, we provide a brief overview of the literature linking adults’ shared book-reading practices to young children’s social understanding and social–emotional competence. We focus on discussing emotions and other mental states during shared book-reading interactions between caregivers and children who are experiencing varying types of psychological, biological, and contextual risks. We center on children impacted by autism spectrum disorder and other developmental disorders, child maltreatment, economic disadvantage, and parental risk factors. We also explore the feasibility of a research design and data collection method featuring themes derived from shared book-reading between young children and their mothers undergoing addiction treatment, an under-explored area of research on this topic. We conclude with implications for intervention and next steps for future research.