This presentation focuses on recent research linking speech perception in infancy to later language development, as well as on new empirical data examining that linkage. Infant phonetic discrimination is initially language universal, but a decline in phonetic discrimination occurs for nonnative phonemes by the end of the first year. Exploiting this transition in phonetic perception between 6 and 12 months of age, we tested the hypothesis that the decline in nonnative phonetic discrimination is associated with native-language phonetic learning. We measured speech discrimination in 7.5 month-old infants using both event-related potentials (ERPs) as well as a standard behavioral measure of speech discrimination, and followed these infants to measure language abilities at 14-, 18-, 24-, and 30-months. Our results show: (a) a negative correlation between infants' early native versus nonnative phonetic discrimination skills, and (b) that native- and nonnative-phonetic discrimination skills at 7.5 months differentially predict future language ability. Better native-language discrimination at 7.5 months predicts accelerated later language abilities, whereas better nonnative-language discrimination at 7.5 months predicts reduced later language abilities. I will discuss the: (i) theoretical connection between speech perception and language development, and (ii) implications of these findings for the putative 'critical period' for phonetic learning.