There is considerable evidence that young children often use novel compounds to label salient instances in familiar categories, spontaneously as well as in experimental settings. Although examples appear in the literature of innovative labels for categories which are unfamiliar or completely new to children, little is known about the role of compounding in this case. A picture naming task was designed to elicit names for concepts assumed to be unknown to young children and not easily recognisable as belonging to a particular category. Each target picture was presented together with pictures of two related and well known concepts. 180 Dutch speaking children, aged 3;0-8;l, participated in the study. Results show that from age 3 on, children are prepared to label novel concepts, appropriateness increasing with age. About two thirds of the appropriate labels consist of novel compound nouns. Influence of type of target concept on appropriateness and compounding is discussed.