Using a picture pointing task, this study examines toddlers' processing of phonological alternations that trigger sound changes in connected speech. Three experiments investigate whether 2;5- to 3-year-old children take into account assimilations--processes by which phonological features of one sound spread to adjacent sounds--for the purpose of word recognition (e.g., in English, "ten pounds" can be produced as "te[mp]ounds"). English toddlers ("n" = 18) show sensitivity to native place assimilations during lexical access in Experiment 1. Likewise, French toddlers ("n" = 27) compensate for French voicing assimilations in Experiment 2. However, French toddlers ("n" = 27) do not take into account a hypothetical non-native place assimilation rule in Experiment 3, suggesting that compensation for assimilation is already language specific. (Contains 5 tables and 4 figures.)