Code-switching is a common phenomenon that bilinguals engage in, including bilingual children. While many researchers have analyzed code-switching behaviors to better understand more about the language processes in bilingual children, few have examined how code-switching behavior affects a child's linguistic competence. This study thus sought to examine the relationship between code-switching and linguistic competency in bilingual children. Fifty-five English–Mandarin bilingual children aged 5 to 6 years were observed during classroom activities over five days (three hours each day). A number of different word roots and mean length of utterance for both languages, and a number of code-switched utterances for each child, were computed. English receptive vocabulary scores were also obtained. Additionally, teachers rated children's English and Mandarin language competencies approximately six months later. Correlational and hierarchical regression analyses support the argument that code-switching does not indicate linguistic incompetence. Instead, bilingual children's code-switching strongly suggests that it is a marker of linguistic competence.