The study explored the nature of mother–child conversation during and after a shared book reading (SBR) interaction and how it relates to children’s social understanding and prosocial behavior. Participants were 61 mother–child dyads (children’s mean age 5 years, 8 months) from low socioeconomic strata (SES). Mother–child SBR and their conversation following the reading were video-recorded. Children’s social understanding was evaluated via their ability to distinguish between social norms violations and moral violations. Prosocial behavior was evaluated through children’s sharing behavior. Results showed that during SBR, mothers and children from low SES tended to stick to the written text, whereas following the book reading, they elaborated beyond the explicit aspects of the text. Furthermore, references to socioemotional issues during mother–child conversation correlated with the child’s social understanding and prosocial behavior, beyond the child’s vocabulary level.