In this review, we synthesize evidence to highlight cognitive appraisal as an important developmental antecedent of individual differences in emotion differentiation and adept emotion regulation. Emotion differentiation is the degree to which emotions are experienced in a nuanced or “granular” way—as specific and separable phenomena. More extensive differentiation is related to positive wellbeing and has emerged as a correlate of emotion regulation skill among adults. We argue that the cognitive appraisal processes that underlie these facets of emotional development are instantiated early in the first year of life and tuned by environmental input and experience. Powerful socializing input in the form of caregivers’ contingent and selective responding to infants’ emotional signals carves and calibrates the infant’s appraisal thresholds for what in their world ought to be noticed, deemed as important or personally meaningful, and responded to (whether and how). These appraisal thresholds are thus unique to the individual child despite the ubiquity of the appraisal process in emotional responding. This appraisal infrastructure, while plastic and continually informed by experience across the lifespan, likely tunes subsequent emotion differentiation, with implications for children’s emotion regulatory choices and skills. We end with recommendations for future research in this area, including the urgent need for developmental emotion science to investigate the diverse sociocultural contexts in which children’s cognitive appraisals, differentiation of emotions, and regulatory responses are being built across childhood.