In two eye-tracking experiments, we investigate adults' and children's on-line processing of referentially ambiguous English pronouns. Sixteen adults and 16 four-to-seven-year-olds listened to sentences with either an unambiguous reflexive (himself) or an ambiguous pronoun (him) and chose a picture with two characters that corresponded to those in the sentence. For adults, behavioural data, responses and reaction times indicate that pronouns are referentially ambiguous. Adults' eye movements show a competition between the looks to sentence-internal and -external referents for pronouns, but not for reflexives. Children overwhelmingly prefer the sentence-internal referent in the off-line picture selection task. However, their eye movements reveal implicit awareness of referential ambiguity that develops earlier than their explicit knowledge in the picture selection task. This discrepancy between performance on a looking measure and a pointing measure in the children's processing system is explained by a general dissociation between implicit and explicit knowledge proposed in recent literature on cognitive development.