Deficient language development encountered in prematurely born children (Grunau et al., 2002) may be linked to abnormal auditory processing, as indexed by behavioural tests (Jennische & Sedin, 1999) and auditory event-related potentials (Jansson-Verkasalo et al., 2003). So far it is not well-known whether auditory processing differs already at an early age between children born preterm and their controls and whether these differences are acoustic or language based in nature. In the present study auditory event-related potentials (ERPs) were used for investigating auditory processing in infants born preterm and their controls to find possible differences between the two groups. The subjects were 15 children born very premature (GA < 32 at birth, age 12 months CA) and 13 age-matched controls. Hearing level of all the children was normal as indexed by brainstem auditory evoked potentials (BAEP) and otoacoustic emissions. Auditory ERPs were recorded in response to vowels (/e/ as a frequent, Finnish /S/ and Estonian /o:/ as infrequent). The acoustic change was smaller between the /e/ and Finnish /S/ than e and the Estonian /o:/. ERPs in response to deviant and standard stimuli were evaluated separately. The mismatch negativity (MMN, the response elicited by the frequent stimulus subtracted from that elicited by the infrequent stimulus) was also analyzed. Preliminary results showed that the N450 in response to frequent stimuli was smaller in prematurely born infants than that in the controls. Two types of mismatch response were observed - negative and positive, both, however, assumed to reflect automatic auditory discrimination. Preterm infants had an enhanced MMN in response to Estonian /o/ whereas controls had earlier, but not larger MMN in response to Finnish /S/. In addition, the following positive mismatch response was observed only in the control group. Our results showed that auditory processing of speech stimuli in children born preterm was deficient when compared to the controls as suggested by the diminished N450 and the MMN. Our study showed that speech stimuli elicited larger-amplitude N450 than the harmonic tones as found earlier in school-age children (Èeponiene et al., 2001). The positive mismatch response, has been previously suggested to reflect an automatic categorization of the stimulus (Friedrich et al, 2004). Therefore, the results suggest that preterm children do not development language-specific memory traces as precisely as the controls and continue to process stimuli more acoustically.