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They tested 6 and 7-year-olds who were given an opportunity to cheat in a trivia game and then lie about their actions and children who were good liars performed better in tests of verbal memory - the number of words they could remember.
According to the team, this means they are good at juggling lots of information, even if they do tell lies.
Researchers from the Universities of North Florida, Sheffield and Stirling, recruited 114 children from 4 British schools for their experiment.
During a question-and-answer game, with the help of hidden cameras they were able to identify the children who peeked at the answer to a fictitious question, even though they were told not to.
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Further questioning allowed the researchers to work out who was a good liar or a bad liar, and they were particularly interested in children's ability to maintain a good cover story for their lie.
In separate memory tests, the good liars showed they had a better working memory for words - but they didn't show any evidence of being better at remembering pictures (visuo-spatial memory).
According to the research team, this was because lying involves keeping track of lots of verbal information, whereas keeping track of images is less important.
Dr Elena Hoicka, a developmental psychologist from the University of Sheffield said "while parents are usually not too proud when their kids lie, they can at least be pleased to discover that when their children are lying well, it means their children are becoming better at thinking and have good memory skills."