Children with autism are often characterized as having abnormalities in auditory processing. This study examined automatic and active processing of simple auditory stimuli in children using a component of event related potentials, the mismatch negativity (MMN). Amplitude of MMN in children with autism was significantly smaller than in children with typical development in unattended conditions. However, children with autism exhibited a typical amplitude MMN when attending to the stimuli. Receptive language and MMN were not related in children with autism. Findings support the idea of abnormal automatic auditory processing by children with autism. Auditory discrimination of infrequent changes in streams of sounds appears to be accomplished through a different mechanism than in typical children, specifically through the investment of attention.