Children are naïve scientists with the ability to imitate and learn new skills. Children learn about the world and become efficient problem solvers through observation. Even though children's capacity to be imitative problem solvers is evident, there seems to be a unique aspect that remains overlooked. When children observe an adult’s unfamiliar behavior, children seem to be inclined to produce irrelevant and superfluous actions, and this phenomenon (referred to as “overimitation”), increases with age. However, when given a cue regarding the situational context, young children are able to show selective imitation, or emulation, that results in the same goal without reproducing an identical action performed by the model. These varied understanding of children’s imitative strategies and social learning are crucial issues that should be further addressed. Hence, the present study examines whether 3 to 5-year-old children can learn to use new tools through observation, and whether children's imitational characteristics vary across different observational contexts. The study included 174 children aged 3 to 5. Results indicate that toddlers provided with a relevant solution to the problem showed higher rates of success than did those who were provided an irrelevant solution. Also, toddlers who observed solutions that were first irrelevant, and then relevant, demonstrated higher rates of overimitation. In addition, the present results substantiated the idea that 3 to 5-year-old children show different imitative responses according to the context. In the accidental context, where children observed irrelevant actions while the person was on the phone, toddlers demonstrated selective imitation; or emulation. The results suggest that toddlers have the ability to consider other’s intentions and show rational imitation accordingly. This study not only provides an analysis of children’s imitational characteristics as a social learner (i.e. by showing overimitation), but also shows that children are rational emulators when given a cue based on a situational context.