Internalization and socialization are central constructs in developmental psychology for explaining and investigating how development happens through social interaction. There has been and continues to be much debate about how to conceptualize and investigate these processes. The ways in which internalization and socialization promote development have also been difficult to identify. The goal of this chapter is to offer a way of clarifying what happens during internalization and socialization by linking them to a clear conceptualization of development. The chapter first provides an overview of internalization and socialization theory and research. This review indicates that the focus on how development happens through social interaction has taken attention away from specifying the developmental changes that occur through social interaction. It is argued that understanding internalization and socialization can be enhanced by linking them to a clear definition of development, such as the one provided by organismic-developmental theory. According to organismic-developmental theory, developmental change is distinguished from any change that may occur over time. Rather, development is defined in terms of the differentiation and integration of action components in relation to cultural values and expectations for development. After explicating organismic-developmental theory's key claims, some implications of utilizing it for advancing an understanding of internalization and socialization are discussed. The chapter ends with suggestions for future research on internalization, socialization, and development.