Purpose: In this study, the authors aimed to examine the long-term effects of prenatal cocaine exposure (PCE) on the language development of 12-year-old children using a prospective design, controlling for confounding prenatal drug exposure and environmental factors. Method: Children who were exposed to cocaine in utero (PCE; "n" = 183) and children who were not exposed to cocaine (i.e., no cocaine exposure [NCE]; "n" = 181) were followed prospectively from birth to 12 years of age and were compared on language subtests of the Test of Language Development-Intermediate, Third Edition (Hammill & Newcomer, 1997b), and phonological processing as measured by the Comprehensive Test of Phonological Processing (Wagner & Torgesen, 1999). The authors evaluated the relationship of PCE to language development through a multivariate analysis of covariance and regression analyses while controlling for confounders. Results: Results show that PCE has small effects on specific aspects of language, including syntax and phonological processing. The caregiver variables of lower maternal vocabulary, more psychological symptoms, and a poorer home environment also had consistent effects on language and phonological processing scores. Conclusions: These findings suggest that PCE continues to have small, subtle effects on specific aspects of language at age 12 years. Phonological processing skills were significantly related to the reading outcomes of letter-word identification, reading fluency, and reading comprehension, indicating that PCE also has small but lasting effects on the language skills that are related to later literacy skills.