As part of her project, a Melbourne University researcher questioned children as young as three about kissing and flirting.
Dr Mindy Blaise from Monash University spent five days at the unnamed centre undertaking research into gender, sexuality and homosexuality.
As part of the research, boys and girls as young as three were asked questions such as "Are you a flirt? and "Have you ever kissed a boy?"
Psychologist Michael Carr-Gregg said the research was inappropriate and he was surprised it had got past the university's ethics committee.
Australian Family Association spokeswoman Terri Kelleher said pre-school children should not be questioned about sexuality.
"We're surprised such research would be carried out drawing the attention of pre-school children to such matters. Children of that age would not be thinking of sexual or gender issues," News.com.au quoted her as saying.
Dr Blaise trains childcare, kindergarten and early primary school teachers at Monash University.
She concluded that pre-school children have an understanding of sexuality.
She told the Herald Sun: "These discussions happen when they are outside playing, playing Lego and at the sand table. when it does happen, what are you (teachers) going to do?"
Her experiment has been described in a paper published in the latest Australasian Journal of Early Childhood.