We present the System Blocks, a new physical interactive system that makes it easier for kids to explore dynamic systems. A set of computationally enhanced children blocks, made of wood and electronics, the System Blocks can assist K-12 educators to teach the complex concepts of system dynamics and causalities. System dynamics and system thinking are methods for studying the world around us. They deal with understanding how complex systems change over time, and how structure influences behavior. In this paper we will show how the System Blocks enable young children (as early as four years old) to create and interact with systems that simulate real-life dynamic behavior such as a bank account; population growth; or the delicate equilibrium of an ecosystem. The System Blocks gives young children a hands-on environment to learn about complex behavior and encourage new ways of thinking. Keywords System dynamics, System thinking, Digital manipulatives, Toys, Construction kit, Simulation, E...