This study investigated the role of speech perception accuracy and speed in fluent word decoding of reading disabled (RD) children. A same-different phoneme discrimination task with natural speech tested the perception of single consonants and consonant clusters by young but persistent RD children. RD children were slower than chronological age (CA) controls in recognizing identical sounds, suggesting less distinct phonemic categories. In addition, after controlling for phonetic similarity Tallal's (Brain Lang 9:182-198, 1980) fast transitions account of RD children's speech perception problems was contrasted with Studdert-Kennedy's (Read Writ Interdiscip J 15:5-14, 2002) similarity explanation. Results showed no specific RD deficit in perceiving fast transitions. Both phonetic similarity and fast transitions influenced accurate speech perception for RD children as well as CA controls. (Contains 5 tables and 1 figure.)