Previous studies show that autistic children fail tests of second-order belief attribution. They also fail tests of lying and deception. The present study used Leekam's (1988) joke-lie distinction task to test (a) understanding of second-order mental states (intention and belief) and (b) the ability to judge these acts as lies or jokes. Seventeen normal and 16 autistic children took part. Eight of the autistic children had previously passed a test of first-order false belief. Results showed that six autistic subjects (37.5%), all of whom are false belief "passers", gave consistently correct answers to second-order mental state questions. Neither normal nor autistic children found second-order intention easier than second-order belief. However, normal children found the ability to judge another person's mental state easier than labelling whether the person was lying or joking, supporting previous evidence. In contrast, there was no difference in these two judgements for autistic children. Overall these results qualify previous evidence by showing that autistic children can use second-order reasoning and can distinguish lies from jokes. Observational data on these children, however, suggest that their competence on the comprehension of these hypothetical situations was not matched by an ability to use lying and joking in real life. Methodological, language and diagnostic factors are discussed as providing possible explanations for the results.