The question of how readers use general everyday knowledge in reading fictional narratives has been the subject of lively debate in narrative and literary theory in recent decades. In this paper, I will look closer at the common claim made in recent cognitive literary studies that the audience's everyday world knowledge is the core mechanism in understanding characters in fiction. More precisely, I will focus on Anthony J. Sanford and Catherine Emmott's treatment of the question of characterization – that is, the representation and making sense of characters in narrative fiction – in their recent work Mind, Brain and Narrative (2012), in order to address the issue of relevant inferences about fictional characters. I will discuss in particular four crucial aspects of understanding characters in fiction that are missing in Sanford and Emmott's model. These aspects concern the reader's knowledge of what kinds of characters may exist in fiction, the role of narrative mediation in fiction, knowledge of genre, and intertextual information. Unlike Sanford and Emmott, who emphasize the writer's rhetorical control over the reader's act of cognition, I consider these aspects to be conventions of reading that both readers and writers apply in narrative understanding.