"Oh, I know him," exclaimed Nancy Reagan as she stepped up to a case of mahogany heads of U.S. presidents at the Corcoran Gallery of Art.

The one that got her attention was the newest work by folk artist Ulysses Davis. The sculpture of President Reagan prompted a discussion of the artist's methods of carving, his religious and patriotic inspirations and his casual way of preserving his art -- in his barber shop in Savannah, Ga. Mrs. Reagan gave the sculpture her endorsement, saying, "I think it's great."

Yesterday morning Nancy Reagan spent an hour previewing the new exhibition, "Black Folk Art in America: 1930-1980." The show focuses on the largely undiscovered world of folk art by black artists, who are largely untrained and who use readily available materials to reflect their neighborhood environments and mythology. The 20 artists in the show use wood to carve airplanes, roses and biblical scenes; aluminum foil to build altars, pencils to draw flowers and the alphabet, and scraps of material to make dolls and rocking chairs.

On her tour Mrs. Reagan met with six of the artists and their conversations were a pleasant exchange of compliments and philosophies. "Keep up the good work," said William Dawson, 80, as he clasped the hands of the first lady. When one of the Corcoran staff interrupted to explain Dawson's work, Mrs. Reagan said, "Don't stop him, he was saying some very nice things." The two discussed his career and how he started carving eight years ago. Dawson told Mrs. Reagan, "People say, when you retire, 'I am not going to do anything but fish and sit.' That's the worst thing in the world. I get up at 4:30 a.m., drink a cup of coffee and find a piece to whittle on. Then I go back to bed and my wife gives me hell."

As she walked through the eight rooms, Mrs. Reagan asked about the religious and patriotic elements of many of the works. Standing in the gallery, which had been painted white in recognition of the white robes worn by Sister Gertrude Morgan, a painter and evangelist, Mrs. Reagan said, "There's a strong religious feeling." When she met Mose Tolliver, 59, who is confined to a wheelchair, she said, "Congratulations. I can't make a stick figure look like a stick figure, myself."

Some of the conversations were humorous. James (Son Ford) Thomas, 55, of Leland, Miss., launched into a story about his affection for skulls. When he told Mrs. Reagan that his grandfather was afraid of ghosts, she laughed and replied, "Aren't we all." Then Thomas Samuel Doyle, 74, who grew up on St. Helena Island, S.C., told Mrs. Reagan about the ghost of a slave and Dr. Buzzard, a voodoo doctor, who communicated with spirits through a conch shell.

At one pause in the tour, Mrs. Reagan was asked about the progress of her husband's State of the Union address. She shook her head, indicating that was not her department. When she was asked about the administration's turnabout on a previous position to grant tax-exemptions to private schools practicing racial discrimination, she said firmly, "I am here to look at the art." Of the exhibit, she said, "It's fabulous. So many of them started when they were so far along in life. Retiring is the worst thing in life. They all used their minds to keep active."