Mental state reasoning is an integral part of children's teaching and learning understanding. This study investigated whether a picture book reading approach focusing on mental state discourse and contrasting perspectives in a preschool classroom setting would improve children's teaching and learning understanding and school readiness. In total, 104 children from four classrooms aged between 46 and 64 months (53 girls, M = 54.03 months, SD = 3.68) participated in the study. Half of the classrooms were randomly assigned to an experimental group where teachers read picture books rich in mental state discourse and engaged in intensive discussions with children for eight weeks. Children's false belief understanding and teaching and learning understanding were measured before and after the eight-week period. The result revealed that picture book reading improved children's learning understanding with a medium effect size, controlling for demographic variables, children's verbal ability, inhibition, and initial false belief understanding. The experimental group children further demonstrated more advanced school readiness 18 months after the intervention ended in a follow-up study using a teacher questionnaire.