L.S. Vygotsky’s distinction between natural and higher mental functions is interpreted in the context of the division between living and objectified consciousness. The chapter argues that innate living consciousness is a foundation of the development of both mature living consciousness and higher mental functions. The early speech emerges because of magical participation of the infants’ living consciousness with linguistic social environment and is from the beginning the carrier of logical structures. Psychological development is presented as two interconnected lines—the development of living consciousness and higher mental functions. The cultural-historical approach towards living consciousness is analysed in the context of recent discoveries of complex natural functions in young infants and compared with the methods of ‘liberating influence’ and magical manipulation of living consciousness. The significance of L.S. Vygotsky’s division between natural and higher mental functions for interpreting the precocious cognitive abilities of infants is discussed.