Background: Children's low scores on vocabulary tests are often erroneously interpreted as reflecting poor cognitive and/or language skills. It may be necessary to incorporate the measurement of word-learning ability in estimating children's lexical abilities. Aims: To explore the reliability and validity of the Dynamic Assessment of Word Learning (DAWL), a new dynamic assessment of receptive vocabulary. Methods & Procedures: A dynamic assessment (DA) of word learning ability was developed and adopted within a nursery school setting with 15 children aged between 3;07 and 4;03, ten of whom had been referred to speech and language therapy. Outcomes & Results: A number of quantitative measures were derived from the DA procedure, including measures of children's ability to identify the targeted items and to generalize to a second exemplar, as well as measures of children's ability to retain the targeted items. Internal, inter-rater and test-retest reliability of the DAWL was established as well as correlational measures of concurrent and predictive validity. Conclusions & Implications: The DAWL was found to provide both quantitative and qualitative information which could be used to improve the accuracy of differential diagnosis and the understanding of processes underlying the child's performance. The latter can be used for the purpose of designing more individualized interventions.