Background: Children with pragmatic language impairment (PLI) show impairments in the use of language in social contexts. Although the issue has been gaining attention in recent literature, not much is known about the developmental trajectories of children who experience pragmatic language problems. Since narrative competence is an important predictor of both academic and social success, evaluating narrative competence in children with PLI is deemed important. Aims: To examine the development of narrative competence of children with PLI compared with typically developing (TD) children using a prognostic longitudinal design. Methods & Procedures: Using the Dutch adaptation of the Renfrew "Bus Story Test," narrative competence was assessed at ages 5-7 for a group of 84 children with PLI and a group of 81 TD children. Groups were compared on measures of narrative productivity, organization of story content and cohesion. Outcomes & Results: Results showed an increase in narrative competence for both groups across most time points. The PLI group obtained lower scores on measures of narrative productivity and story content organization compared with their TD peers at all time points, but did not show more problems related to narrative cohesion. Most problems in the domain of narrative productivity and story content organization were shown to be independent of lower non-verbal intelligence. The developmental trajectory for the PLI group was largely similar to that of their TD peers, and showed a persistent developmental delay of approximately one year. Furthermore, qualitative differences were visible in the proportion of irrelevant T-units, which was consistently higher in the PLI group. The different narrative measures were found to be relatively stable over time. Conclusions & Implications: The results of this study suggest that narrative difficulties of children identified as pragmatically impaired persist at least until middle childhood. The persistence of the measured developmental delay, combined with the finding of qualitative differences, support the view of PLI as a deficit, which is consistent with the addition of social communication disorder (SCD) to the "Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition" (DSM-5).