Purpose: The aim of this study was to investigate developmental and noise-induced changes in central auditory processing indexed by event-related potentials in typically developing children. Method: P1, N2, and N4 responses as well as mismatch negativities (MMNs) were recorded for standard syllables and consonants, frequency, intensity, vowel, and vowel duration changes in silent and noisy conditions in the same 14 children at the ages of 2 and 4 years. Results: The P1 and N2 latencies decreased and the N2, N4, and MMN amplitudes increased with development of the children. The amplitude changes were strongest at frontal electrodes. At both ages, background noise decreased the P1 amplitude, increased the N2 amplitude, and shortened the N4 latency. The noise-induced amplitude changes of P1, N2, and N4 were strongest frontally. Furthermore, background noise degraded the MMN. At both ages, MMN was significantly elicited only by the consonant change, and at the age of 4 years, also by the vowel duration change during noise. Conclusions: Developmental changes indexing maturation of central auditory processing were found from every response studied. Noise degraded sound encoding and echoic memory and impaired auditory discrimination at both ages. The older children were as vulnerable to the impact of noise as the younger children.