Humans have an intuitive understanding of physics. They can predict how a physical scene will unfold, and reason about how it came to be. Adults may rely on such a physical representation for visual reasoning and recognition, going beyond visual features and capturing objects in terms of their physical properties. Recently, the use of draped objects in recognition was used to examine adult object representations in the absence of many common visual features. In this paper we examine young children’s reasoning about draped objects in order to examine the develop of physical object representation. In addition, we argue that a better understanding of the development of the concept of cloth as a physical entity is worthwhile in and of itself, as it may form a basic ontological category in intuitive physical reasoning akin to liquids and solids. We use two experiments to investigate young children’s (ages 3–5) reasoning about cloth-covered objects, and find that they perform significantly above chance (though far from perfectly) indicating a representation of physical objects that can interact dynamically with the world. Children’s success and failure pattern is similar across the two experiments, and we compare it to adult behavior. We find a small effect, which suggests the specific features that make reasoning about certain objects more difficult may carry into adulthood.